Update #4/ Week of July 27, 2009

Good Morning Everyone and Happy Thursday! We’re losing a little ground this morning on rates. Things could be a lot worse seeing the start that the equity markets had this morning. The party started in Asia last night when the Hang Seng and the Shanghai Composite both had nice rebounds after their losses of the day before. When the European markets opened, a report came out that showed business and consumer confidence in the 16 countries that use the euro has improved for the fourth straight month in July. As you can see from the index of world markets, the mojo was flowin’ by the time our stock markets opened.

Sure enough, right out of the gate the Dow was up around 200 points. The credit instruments immediately ran for cover and rates went into the tanker. The rally on the stock market has dissipated somewhat as of this writing, and the credit markets have settled down a bit. Our rates on our 30 year conforming worsened by about 20 bps from yesterday morning’s rates, so the damage was negligible. Good thing! There seems to be plenty of money still sitting on the sidelines, and investors are cautious on both the equity and credit markets. A slew of earnings reports still to happen this week, so look for more volatility.

Initial jobless claims rose this week over last week, but the continuing claims number keeps falling, so that’s seen as a positive thing. Yet, RealtyTrac reported this morning that California is #4 in the nation for foreclosures for the first 6 months of this year. That’s better than #1, I guess, but we have the most cities of the top 50. Unemployment is that 800 pound gorilla still lurking in the corner of the rooms where investors are talking up the end of the recession. These recently unemployed people still have to figure out how they are going to pay their mortgages going forward, so look for foreclosures to continue. Also, the recasting of subprime loans is going to have a huge affect on foreclosures for the next 2 years.

I will be in the office all day today, catch me here if I can help you in any way. Have a terrific Thursday!