News You Can Use from Gary Moore

Weekend Market Update

Aug. 21-22, 2010

Bonds continue to draw investors’ money away from stocks as the markets ponder weak economic data and stock markets experience declining volume.

Stocks sold off on Thursday after disappointing unemployment numbers, followed through with selling on Friday morning and then made up some losses to end the day. The Dow average was down 0.9% for the week and the S&P was down 0.7%; the Nasdaq average was up 0.3% for the week.

Data from Credit Suisse showed institutional investors had adopted a more defensive stance in the second quarter, increasing holdings in areas such as telecoms and utilities along with food, beverage and tobacco---a trend which could continue due to weak data.

The government will report GDP next week, and it is expected to show a 1.4% increase in the second quarter, down from the 2.4% rise estimated a month ago. Data on home sales will also be reported next week.

Anemic volumes on Wall Street recently -- including the lowest volume tally of the year on Monday -- will also present another obstacle as they show apprehension by investors and are unlikely to improve without a significant catalyst.

In tough times, the rich get richer, and the big fish swallow smaller fish. If there is anything catching investors’ interest in Wall Street now it is speculation as to who will be the next merger-and-acquisitions matchup. On Thursday Intel announced it was buying software maker McAfee for $7.7 billion.

Money flowing into bonds sent yields lower this week. The 2-year Treasury note was yielding .45%---an all-time record low--- at one point in Friday trading, and it closed at 0.5%. The 10-year Treasury was yielding 2.62% after briefly touching 2.53%---its lowest reading since March 2009. The 30-year bond was yielding 3.67% for a 16-month low. Selling of large issues in Treasury auctions next week could compete for bids on the market, however, and could put the brakes on the latest rally in Treasuries.

As Treasuries have been gobbled up, mortgage rates have remained low, although mortgage-backed securities got rattled twice---Wednesday and Friday---this week and closed Friday down 28 basis points to end the week down 16 basis points per the Fannie Mae 4% contract. That mortgage rates are disconnecting from the trade in Treasuries is viewed as further evidence that mortgage rates are as low as they will go.

Please call me with any questions about the market or to pre-approve you for a purchase loan or to run a free analysis of what a refinance---with cash out or not---would mean for your financial bottom line. Gary Moore 615-579-8658.

30-Year Conventional Fixed

4.25% $200,000-$417,000

15-Year Conventional Fixed

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...by Gary Moore

Mortgage Planner, First Community Mortgage

...a subsidiary of First Community Bank

Cell: 615-579-8658 Toll-free fax: 866-321-6513

“Aristotle maintained that women have fewer teeth than men; although he was twice married, it never occurred to him to verify this statement by examining his wives' mouths.”

—Bertrand Russell

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http://www.BrentwoodHomeLoan.com

(0% points, 1% origination. Market Update informs consumers and Realtors on market trends, offers subjective opinions and is not a quote for a unique borrower.)