I know that we all have different roles when it comes to transferring real estate from one person to another. Some of us deal with people while some of us deal strictly with paperwork. Some of us do it all while still others do work exclusively over the phone.
No matter what your role in this diverse transaction, we are all affected by what is taking place with our nations economy. I know that Real estate sales people do not watch financial reports and constantly changing economic data. It's not as important as knowing each individual client's situation in order to find them exactly what they are looking for in terms of the home that they decide to purchase and live in.
Watching all of the financial reports and economic data is an important part of my job. Typically I have a fairly good idea of where rates are headed. Have you Seen today's news?!
This morning when I came into the office the DOW was down significantly at around 68 points and things were not looking to good. We all knew about the anticipated FED Funds rate cut which is designed to give the economy an extra boost. The Prime rate was not cut today, just the FED Funds rate and the discount rate.
When these rates are cut it usually takes a little bit of time before the impact trickles into the financial sectors and more specifically it takes a little time to see any impact on mortgage rates.
My projected overview for today based on the last few days of performance was that the FED would cut the rate, investors would rally, and the stock market would close out in positive territory. Interestingly the stock market did rally amid the announcement of the FED rate cut, but it didn't last more than a couple of hours.
The stock market rallied gaining over 200 points throughout the day. During the last 2 hours of trading their was a major sell-off. It seems that investors did not want to leave their gains on the table in such a volatile market with 2 more important economic releases coming out tomorrow. The stock market closed at -53.02 (DOW -37.47, NASDAQ -9.06, and S&P 500 -6.49).
Whats more interesting is that stocks and bonds usually move in lock step opposite each other. Usually when stocks are down bonds are up and vise versa. Bonds offer a safe haven for investors who view the stock market as too much of a risk when things are as unstable as they are. For a good chunk of the day the stock market was down and at the same time the bond market was down.
These are very difficult times; unstable at best. As far as mortgage pricing goes... Right now I just don't know, not sure which direction it will go. What makes the prediction so difficult to make is the fact that they is key economic data being released tomorrow and for the rest for the week (for that matter) which is very tight. A slight variation up or down could have a significant impact and cause either bond or stocks to rally. Both options are completely feasible and we just won't know until the reports are released and even then there is uncertainty about how the markets will react.
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