Rate Watch

This is a regular feature that's been going out every morning for the last couple weeks, and is attracting a following. Here it is for today:

More economic news today, and it was fairly benign for inflation, which is good news. Inflation erodes the attraction of bonds, since bonds are fixed-return investments, so low inflation reduces the necessity for high bond yields. High bond yields, for those just joining us, mean high interest rates, and mortgage interest rates are all we care about here.

I spoke at some length to Congressman Chris Cannon a day or so ago, and we discussed several things of note that I don't want to get into deeply here (check the blog at thechrisjonesgroup.com), but one thing I told him was that if Congress wanted to help, the best thing they could do was NOTHING. Markets rely on confidence, and uncertainty is perhaps the worst possible drag on an economy. The more Congress tinkers, the worse things will get. Period. Yeah, I know. It won't help, but at least I tried.

5.875% is par on the 30-year at the open, but remember the end of the quarter is Monday, so there could be large volatility the next two days. FHA par is lower by about .25%.

Cj

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