To dip or not to dip, that is the question. Just when you think we are headed back into recession, a report pulls you back out. Housing starts surprised to the upside and so did the CPI, coming in at a year over year figure of 3.9% inflation - the Fed’s target is 2%. GE announced it earnings are up 18% and McDonald’s earnings came in above estimates. But the Eurozone fears persist and last night Fed Governor Daniel Tarullo made headlines as he called for the Fed to engage in another round of Mortgage Bond purchases. All of this simply means we are still on the edge and could be pushed either way – double dip or continued slow recovery.
Remember last week when I said ‘mortgage rates tend to follow the 10 year Treasury bill, not exactly, but generally in terms of movement up and down’? Well, this week is a perfect example of how sometimes that is not the case. The CPI inflation data pushed the 10 year T Bill up while the Fed Governor’s announcement that they might buy mortgages again kept mortgage rates low. As a result, your borrower’s buying power continues to be phenomenal. Stay tuned, Europe looks like its coming to a head and that might give us an answer as to which way we’ll go from here.
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