Update #4/ week of December 7, 2009

Good Morning Everyone and Happy Thursday! Credit markets are taking a pounding this morning, but rebates are only about 15 to 30 bps worse than yesterday. The stock markets shot up right out of the gate, but appears to have hit an invisible ceiling and has been struggling for the past couple hours to maintain the rally. Mortgage secondary marketing decision makers have been cautious of late to chase the rates down, which is to our benefit when we have a spike in the wrong direction and pricing is only slightly worse. Again, it just appears equity traders are not going to allow a correction before the end of the year. A correction after the 1st of the new year, though, could mean rates continuing to stay down until the Spring. We’ll have to wait and see how all that plays out.

The economic news of the morning, as in every Thursday, is the initial jobless claims which rose to 474,000 for the week ending Dec. 5 – quite a bit higher than the 455K anticipated. The last couple weeks surrounding the holiday saw smaller numbers and was cause for an overly optimistic analysis about unemployment. We’re back to a normal week’s report now, and the news is more in line with the previous month’s reports. Continuing claims continue to fall though, which is good news. The latest figure came in at 5.16M -- far below the 5.45M expected.

Also, in other economic news, our trade deficit is benefitting from the latest move in the dollar and has shrunk to $32.9B in October from the $36.8B expected and below the revised $35.7B in September. Our goods are cheaper overseas and thus the exports are making up ground compared to imports. Bank of America was allowed to pay back the $45B in TARP money last night, and Citibank seeks to do the same next. This is another reason, I suppose, for optimistic mood on Wall Street.

As I mentioned, pricing is only slightly worse than yesterday’s, we should count ourselves fortunate. I will be in the office all day today. Call me here or email me if I can help you in any way. Have a terrific Thursday!