Given the economic backdrop (high unemployment, etc.) we feel this move is close to a bottom. Trouble is, picking bottoms are like catching falling knifes, hard to do without some pain. Best bet for Austin mortgage borrowers is to use the float down option ("option to lower your interest rate one time") to guard against a reversal (rally).
Currency wars is what this is all about and the Fed is getting exactly what it hoped for, consumer expectations of rising inflation to shut the door on deflation. This was evidenced in last week’s Michigan Sentiment Survey. With QE2 priced in “before” it happened and the negative connotations mentioned above, treasuries have continued to be slaughtered, sending credit costs higher, doing nothing to stimulate the economy. Look for the Fed to try and talk rates back down.
Best bet for Austin mortgage borrowers is to be conservative/cautious with locking your interest rates as the political news will be tomorrow morning's early trade
With the elections and the Fed meeting next week to hopefully clarify QE2, things could get wild. We also have the Employment report for October a week from tomorrow. Austin mortgage borrowers are advised to take advantage of any rate improvement we see as the skies have yet to clear.
Austin mortgage borrowers are advised to be defensive. Stocks will be the key. If they slip, we’ll do better. Overall, QE2 will keep a floor under the market. Just the same, we’ll need to deal with the volatility.
We see the set up as neutral, given a multitude of bearish divergences on one side and Fed Chief Bernanke and his dollar printing press on the other. Throw all the factors together and you can make a good case for the market and Austin mortgage pricing to stall unit early November’s elections and FOMC meeting.
Next week will be the true test, one that we would expect will see the market trade sideways to a little better (slightly improving mortgage pricing). Overall, we think this is the low probability trade as QE2, even though it is fully priced in, is a force to be reckoned with. When the Government is the buyer of choice, most follow the ant age, “Don’t fight the Fed.”
Call the market neutral/bearish with good support nearby. As we have preached all week, defense is your friend, Austin mortgage borrowers, and the exclusive float down option from Max Leaman is a no brainer.
Austin mortgage borrowers: best to take a conservative approach given the amount of volatility we expect.
Best bet for Austin mortgage borrowers is to take a defensive posture. With so much bond-friendly news priced in, the risk reward for better mortgage pricing is just not there, folks.
