Financial Update #3 of 5/ Week of August 24, 2009

Good Morning Everyone and Happy Wednesday! Finally we get some follow through from a good day in credit markets yesterday. The auction of 2-year Notes yesterday went well and we saw credit instruments improve throughout the day after starting off in negative territory. Today equity markets are flat . . . I mean, really flat. The Dow is down less than 1 point as of this writing and credit instruments are holding their own. Our pricing is about 20 bps better than yesterday morning. Fine, we’ll take it.

Interesting to see the equity markets struggle as most of the economic news this morning was positive. Durable goods orders for July posted a 4.9% increase, better than the 3.0% increase anticipated. This number is considerably better than the 1.3% decline of June. The Cash for Clunkers program accounted for about ½ the increase, if you take autos out of this number, then you’re at 2.5% increase. The big economic news story of the day is the New Home Sales for July which came in 9.6% higher than in June. Of course we had to give up price in order to gain volume, but it is a good sign for the housing industry. The median price for these homes was down significantly from June’s numbers.

This news would normally have propelled the equity markets into record territory for the year, but that’s just not happening. Maybe there’s just not enough interest in running the market up any higher. That should keep credit prices low for the time being until we get that big sell off everyone’s expecting. There’s an auction of 5-year T bills happening today that might have some affect on credit instruments, although it should be positive as we have seen a healthy appetite for these safer investments of late.

Take a look at our 5/1 ARM’s both on conforming and confumbo products. Our conforming 5/1 ARM (fully amortized) is giving back (.526) rebate at 3.875%!!!! Our confumbo is giving back (.306) at 4.375% and we’re basically par at 4.25%!!!! Amazing!! I will be in the office all day today if you need me. Call me here or better yet email me and I’ll do my best to help you. Have a terrific Humpday!