Mortgage Market Weekly

Last Week:
Overall a slight gain in the mortgage market last week. On the other hand, the stock market saw a very nice 300+ pt. gain for the week. Not too often do we see those two things go hand-in-hand. Typically the two trend in opposite directions. Fueling the stock market were signs of strength in both the manufacturing and service sectors. The Federal Open Market Committee (FOMC), or just commonly referred to as "The Fed" announced it is staying the course on low rates. No big surprise here. Too much politics at play. When inflation does hit, and hit it will, lets hope they can keep it under control. The employment report was the big event for the week. US payrolls down 190,000 to 10.2% unemployment rate.

This Week:
The economic reports will be light this week so the bond market will take it's cue from the stocks and overall market trends. While economic reports will be light, the new debt to absorb will be heavy. The Treasury Department will auction off $81 billion in new debt this week. So far, the market has shown a healthy appetite for our debt. On average we are adding roughly $200 billion in new debt every month. As long as the dollar remains low, the market seems to be willing to buy it up. When and if the market signals any weakness in taking on additional debt, it will get bad in a hurry.  There is literally tons of our debt out there. If traders get any sense the music is coming to a stop, they will unload in a hurry or suffer the consequences of not finding a chair. In conjunction with the large amount of government debt being set free in the market place, news today from the Financial Times shows a record amount of corporate debt as well. So far in 2009, $1 Trillion in corporate bonds have been issued. WOW! I fear the day it all comes due.

Economic Calendar:
Initial Jobless Claims come out on Thursday.  Really the only big market mover of the week, so all eyes will be on the Treasury auctions as well as stocks.

Interesting Tip:
Big word of caution on credit cards. New Federal regulations take effect in February on the Consumer Credit industry, namely credit cards. These new rules will prohibit many of the current rate and fee hikes that are common place in the industry. The credit card companies are not going to miss out on an opportunity to stick a few more bucks in their pocket however. Many of these companies are using the short window before these new regulations take effect to add to their profits by raising their rates and fees. Just in time for the holiday season I might add. This comes at a time when the Fed and banks in general have record low borrowing costs. Just don't get caught unprepared should they raise your rates. For most of us, the last thing we need right now is higher bills.