Interest Rate Roundup

Tuesday, July 25, 2006

Good to be back...

Sorry I haven't posted in a little while. I've been crazy busy with lots of projects and issues. Some quick thoughts to get you caught up:

* Interest rates are flat-lining here at just over 5% across the maturity spectrum. Not a lot of major data out until the July jobs report (August 4). The next non-economic catalyst for a big move is the Fed's policy meeting on August 8. I'm still leaning toward another hike.

* Existing home sales numbers just out for June stink. According to the National Association of Realtors, sales dropped almost 9% year-over-year, inventory for sale skyrocketed 39% to a record 3.73 million units, and prices are starting to fall. NATIONWIDE median condo and co-op prices dropped 2.1% from June 2005. Single family home prices DID rise, leading to a market-wide increase of an ever so slight 0.9%. But that was the smallest gain in 11 years. And here’s the catch: Those are NOMINAL prices, not REAL (or inflation adjusted) ones. The Consumer Price Index overall gained 4.3% in June. So when you factor in inflation, the average home lost 3.4% in value.

* Stock investors in general trading off the "soft landing" economic theory here, in my view. In their world, inflation pressures are gently easing, growth is gradually decelerating, but profits are fine, housing will just cool without any major loan trouble and/or defaults, the Fed is perfect, and life is beautiful. Sounds completely logical, doesn't it? (he says, sarcasm dripping from his toothy maw!)


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