Some headlines from last week include that the market is currently predicting a 46% chance of a 50 basis point drop at the next Fed meeting on April 29th/30th. There is a 100% chance priced in that we will get that 50 basis points drop by August. The minutes from the last FOMC meeting were published and lowered the economic outlook on Tuesday. Policy makers expressed concern at last month’s meeting that the economy may be headed for a prolonged recession, the result of a weakening consumer and continued problems in the credit market.
Today’s retail numbers from March showed a surprising .2% increase. The numbers are mixed, however, when analyzed further. Consumers spent less on furniture, clothing, and appliances, as more of their money went toward gasoline and food. Consumer spending accounts for more than two-thirds of our economy.
The average rate on a 30 year fixed is currently about 5.62% according to Bankrate.com. This will include some percentage of points and is down from 6.08% a month ago. The credit market continues to be a driving force in determining mortgage rates for consumers. Much attention will be paid in the coming days as first quarter earnings reports are due out by the end of the month.
Wachovia posted their earnings report today and showed greater losses than anticipated by the market.
Businesses are in far better shape than they were entering the past two contractions according to Former Fed Chair Alan Greenspan. A “major advantage” says Greenspan is that Corporations outside of financial services have socked away more than half a trillion dollars in cash. They have reduced short term debt and inventories. This could mean a quicker recovery in what is a relatively healthy economy outside of housing and the financials. “Cash flows are more than adequate, and the amounts of monies that they need are very readily financed in the weakened credit markets,” Greenspan said at an April 8th conference. Thank you to our Market Source:
Mike Quigley
Mortgage Consultant
Coastal States Bank
Office: (843) 837 -0169
Fax: (843) 689-7852
Posted on April 14th, 2008 by Donna
Filed under: Market
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