Realtor, Tennis Player, Titans & Vols Fan, Nashvillian… Live! Work! Play! in Middle Tennessee

Market Comment for Week of December 27, 2010…

leave a comment »

MARKET COMMENT   Mortgage bond prices started the week in positive territory. Unfortunately those gains were short-lived as trading was thin and choppy with continued large market swings. Most of the data was neutral. We received some positive news that inflation remained in check as the PCE core came in up 0.1% exactly as expected. As the economy improves inflation will become a focal point for investors. Mortgage bonds ended the week slightly positive by about a 1/8 of a discount point. 

Look for the possibility of volatility amid likely thin trading conditions and a shortened trading week. The bond market will close early Friday afternoon ahead of the New Year’s holiday. 


  • 2-year Treasury Note Auction; Dec. 27; Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
  • Consumer Confidence; Dec. 28; Consensus Estimate 56; Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
  • 5-year Treasury Note Auction; Dec. 28; Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
  • 7-year Treasury Note Auction; Dec. 29; Important. $29 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
  • Weekly Jobless Claims; Dec. 30; Consensus Estimate 423k; Important. An indication of employment. Higher claims may result in lower rates.

FOREIGN DEMAND   China is the largest foreign holder of US debt and continues to debate future purchases. Recent talk from China indicates a desire to diversify. Many stories hit the wires last week indicating that diversification may take the form of European debt purchases. A Chinese spokesperson told reporters that the EU will “be one of the major markets for our (future) forex investment.” These remarks caused some weakness in the US debt market Thursday. The concerns were eventually calmed but uncertainties remain regarding the future of the entire US debt market. 

Global investors are constantly searching for opportunities that will provide the greatest return with the least amount of acceptable risk. That is one of the major problems with China investing in EU debt. While the higher rates of return are enticing, they are not without considerably higher risk. 

Investment products inherently all possess some sort of risk. As global financial markets struggled, many market participants searched for a safe haven in the US financial markets even with their shortcomings. With the backing of the US Government, investors viewed the US Treasury and mortgage bond markets as less risky investment opportunities amid global economic uncertainty. This resulted in an increased demand for US investments, such as the mortgage-backed securities that affect mortgage interest rates. Increased demand for mortgage bonds moved prices higher and interest rates lower. A reversal of this foreign demand has and may continue to result in future spikes in mortgage interest rates. 

Caution is the key heading into the auctions this week. There is a real possibility of wild market swings with thin trading conditions likely. Mortgage interest rates remain historically favorable. The future remains uncertain. Today’s rates are a given. Lower rates are not a given as is evident from the overall upward trend seen the past few months. 

Source: Todd Kabel, US Bank; blog distribution provided by Kenneth Bargers and Bargers Solutions residential real estate services located in Nashville, Tennessee


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


Ad, Sales & Marketing.

Rachel Being Chatty

Now featuring 15% more sarcasm.


The Casual Way to Discuss Movies

The Ninth Life

It's time to be inspired, become encouraged, and get uplifted!


The Casual Way to Discuss Movies

The Shameful Sheep

shit storms, shame, and stories that make you cringe

Autoindigo Blog

Fresh news about automotive world. Cars overviews written by experts, pros and cons, features, performance, safety, interior and driving.

Little Fears

Tales of whimsy, humor and courgettes

VR, AR, 3D and Video Glasses Reviews

Woodstock Business Welcome

Welcome Wagon Canada

Blookup Blog

Turn and print all your digital contents, blogs and social networks into amazing real paper books on


Graphic Designer


Sabbles woz 'ere


A town everyone hates, yet no one leaves...

Attila Ovari

Loving Life and Inspiring Others

Augusta Littleton

Nonprofits and Charities

The Home Buyer Class Blog

What to know when buying a home

The Contractor's Cabinet

A Blog On Construction & More


Love, Travel Lifestyle and Destinations


My journey - The good, bad and the ugly


"A Blog worth reading "

john pavlovitz

Stuff That Needs To Be Said

Smart Discount Shop

Discover all the creative and ingenious ways to save money !


4 out of 5 dentists recommend this site


A great site

Vonj Productions

Bringing you love through spirit!

The Dystopian Nation of City-State

A cruel, futuristic vision created by science fiction authors James Courtney and Kaisy Wilkerson-Mills. ©2013-2016. All Rights Reserved. All writings available through Amazon.

Bubba Pigg

South' s Leading Anti- Intellectual: Wealthy in Common Sense and the Wisdom of Selfishness

@TheTexasBroker Blog

Real Estate Sales Houston Texas

The Travelling Pantry

Adventurous, Honest and Wholesome

Top 10 of Anything and Everything!!!

Animals, Gift Ideas, Travel, Books, Recycling Ideas and Many, Many More



William the butler

Serving drinks since 1985


This site is the bee's knees

Plutonium™ Paint

Ultra Supreme Professional Grade Aerosol Paint

Covered in Beer

by Thomas Cochran, Known Moron

Natalie Breuer

Natalie. Writer. Photographer. Etc.

Post it Notes from my Idiot Boss

delivered directly to my computer monitor on an all too regular basis...

Late Blooming Entrepreneurs

Making it big in business after age 40