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Posted by: Bruce & Sandy Soli | February 10, 2010

Economic Update From Steve Peterson 2/10/2010

As the Dow Jones average  bobs up and down around 10,000, the movement seems to underscore the view of the current economy, which seems to melt from one focus into another. It’s very hard to read. The only thing that seems somewhat clear is that we are, indeed, moving toward recovery, whatever that will end up looking like–nothing to jump and shout about, I suspect.

But beneath the daily chatter, there seems to be a verifiable trend. Things are getting somewhat better. Certainly, we can feel it in the real estate market.

I hope your business is neither chilly nor gray. May the sun break through any clouds on the horizon. There are bargains in the market; let’s hope there are buyers who recognize them.

 Please find attached this week’s economic update. I have also copied the report at the end of this email.

 Conforming 30 year fixed rates are currently 4.875% with no points (primary residence with 20% down on a single family dwelling, excellent credit, etc.).

 The best jumbo rates are 4.00% with no points for 5/1 ARMS for loan amounts up to $850,000 (Primary residence, SFD, 70% loan to value, Nevada, etc.).

Warm regards,

 Steve Peterson

Branch Manager

Sierra Pacific Mortgage

Office: 888-232-7687

Cell: 775-219-7151

Fax: 866-649-3235

February 10, 2010


 Gold $1073.40/ounce [down]

Crude Oil (Brent) $71.07/brl [down]

U.S. Dollar to…

    Euro .7286 [up]

    Japanese Yen 89.41 [down]

6-mo Treasury Bill Yield 0.17%

10-yr Treasury Note Yield 3.58%  [6-mo up 1 bp, 10-yr down 7 bps]

11th Dist Cost of Funds 1.828%[-]

30-yr Fixed-rate Mortgage 5.33%

15-yr Fixed-rate Mortgage 4.77%

1-yr ARM 4.31% [HSH averages rates: 30-yr  down 6 bps,15-yr down 4 bps; 1-yr ARM down 30 bps]

Mortgage Bankers Association Mortgage Applications Index

week ending 1/29

  Overall  620.7 (up 21%; down 10.9% the week prior)

  Purchase Money Loans 237.8 (up 10.3%; down 3.3% the week prior)

  Refinancing Loans 2854.8 (up 26.3%; down 15.1% the week prior)

 Jobless Claims 1/30  480,000 – prior week 470,000 – continuing claims level at 4.602 m

Employment Report Jan 20,000 payroll jobs lost – unemployment rate down to 9.7%

ISM Nonmfg Index JanUp from 49.8 (Dec) to 50.5

Consumer Credit Dec  Down 0.8%

Weekly Commentary

“The forthcoming expiration of the tax credit in the spring is a point of concern for the housing outlook. Nevertheless, Moody’s Economy.com expects that by mid-2010, the housing market and the national economy will be strong enough to create self-sustaining growth in home sales. Indeed, sales have likely already bottomed. Although the recovery will be rocky, sales will likely trend upward, albeit at a moderate pace for the next year.” [Michael Zoller, Moody’s Economy.com]

The state of the economy is all in the eyes of the observer, and what you see depends on where you look. What the stock markets have been doing for many weeks is changing their focus on a rapid and regular basis.

Thus, one day most investors seem preoccupied with the sovereign debt issues faced by euro nations like Greece, Spain and Portugal. As a result, stock market indexes and interest rates fall, based on pessimism about the global economic recovery, but the dollar’s exchange value rises because the dollar becomes the primary safe haven among currencies when fears rise.

The next day, we may see a favorable earnings report from a major corporation. Investors, believing it the harbinger of better days for the American economy, then push stock indexes back up. Rates follow, because a sustainably recovering economy will mean higher interest rates at last. And the dollar’s exchange rate edges down.

What we see before us from a longer view is evidence that the economy is (1) indeed improving but also (2) marching through a minefield of potential problems. Jobless claims rose last week, though the employment report offered relatively good news. And the number of mortgage applications appears to be rising again, in the wake of the extension of the $8,000 first-time homebuyers’ tax credit and initiation of the $6,500 “move-up” buyers’ credit.

But the ISM Non-Manufacturing Index, offering insights into the growth or contraction of our nation’s service sector, refuses to make much of a positive move. At 50.5, it has barely edged into weak expansion. It seems to be telling us not to expect very solid growth of our overall recovery any time soon.

Beneath all the ups and downs, this seems to be the trend: The economy is indeed improving, but at a maddeningly slow pace.

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