Mortgage Rates



The final day of the year; nothing of substance to think about. No news of consequence out of Europe, the various markets in Europe are slightly better today. At 9:00 this morning the US stock indexes traded fractionally lower, the 10 yr note +3/32 and mortgages at 9:00 +5/32 (.15 bp).

No economic data today; trading will be thin, by 1:00 most will have left the area. Markets open all day.

Europe remains the key for US interest rates, not news that safety trades have pushed US yields to all-time lows. In Jan, after a few weeks of quiet from the EU, ECB, and the IMF, expect renewed comments and "plans" on how to deal with the increasing debt mess and banking concerns in Europe's banks. At the end of the year the dangling question that has hung over global markets for two years hasn't changed. Can officials of various bodies actually solve the debt crisis in a manner that doesn't lead to default? And where is the money going to come from to relieve the region's banks? At the end of day so far, there isn't enough money or near term solution to the developing crisis. Will Europe drag global economies down as it re-enters recession?

At 9:30 the DJIA opened -14, 10 yr +3/32 at 1.89% -1 bp and mortgage prices after being +.15 bp at 9:00 fell back to +.09 bp on 30 yr MBSs.

The rest of the day should be quiet with little changes in stock indexes and interest rates. The outlook for interest rates remains positive but uneasy at these low levels. We are still concerned that the lows may have already been achieved when the 10 yr hit 1.70% last Sept. Lower rates from these levels depend on the moves made in Europe to corral what appears to be coming defaults; bailouts from the ECB, IMF and EU along with Germany and France are needed, so far that hasn't happened----only talk.