Brentwood TN Real Estate and Homes

Last Week in Review

"I'M FREE...FREE FALLIN'." Tom Petty. And a free fall indeed was the case last Wednesday, as Bonds had their worst one-day performance since last October, losing an astounding 206bp. So what caused this free fall...and what helped Bonds and home loan rates rally back and improve later in the week? Here's what you need to know.

The main culprit for Wednesday's sell off was supply. The Treasury auctions and the increased number of refinance transactions closing have added hundreds of Billions of dollars of new Bond supply to the market. Economics 101 tells us that anytime supply vastly exceeds demand, prices will move lower, and that's exactly what we saw last week...and as Bond prices move lower, home loan rates move higher. And the trend isn't likely to end anytime soon, as the Treasury will have to continue to pump out major supply of Bonds, in order to pay for the massive government stimulus plans...and the Fed buying plan simply won't be enough to balance out supply and demand - it's like trying to sop up a flood with a sponge. Bottom line - rates are likely on the rise, but still near historic lows. Let's talk and make sure you have taken necessary actions for your own financial situation.

Yet the news wasn't all doom and gloom - as both the Dow and S&P 500 have seen three months of positive gains for the first time in over a year! And the National Association for Business Economics (NABE) said that the end of the recession is in sight, noting that, "While the overall tone remains soft, there are emerging signs that the economy is stabilizing." The Commerce Department's report that Gross Domestic Product for the first quarter fell at an annual rate of 5.7% was better than initial estimates, also indicating that the recession may be slowing down and turning more moderate. Important reminder: An improvement in the economy will likely push rates higher over time, which is why it's important to take action during this opportunity of low rates.

In other news, Initial Jobless Claims were better than expectations, but a higher revision to the prior week's reading offset the slightly positive headline number. Durable Goods Orders in April also came in a bit better than expectations. On the housing front, while New Home Sales were just under estimates, Existing Home Sales came in higher than expectations. These reports didn't impact the markets a great deal last week, as the impact from all the extra supply was the real mover and shaker.

Bonds were able to regain some ground Thursday and Friday after their steep free fall on Wednesday, but even with the improvement, home loan rates ended the week .25% to .375% worse than where they began.

READY TO CLEAN OUT SOME OLD CLUTTER AND GAIN SOME EXTRA CASH? IF YOU'VE BEEN THINKING ABOUT HOLDING A YARD SALE THIS SUMMER, CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR GREAT TIPS THAT WILL HELP YOUR SALE SOAR TO SUCCESS.

Forecast for the Week