This world economic summary is provided in part by Steve Peterson, a very good Incline Village mortgage broker and contributorto Tim's Incline Village Real Estate Blog.  This national economic summary really is tyed into the Incline Village Luxury Real Estate Market, home values and listing prices.

This is a tough time to be an investor in the stock market or Treasury securities or gold. They are moving constantly--not a great deal, but just enough to thoroughly mess up your profits if you are a trader. So it's reasonable to find a folding chair and move it to the sidelines, waiting for a clearer sense to emerge regarding where the markets are most likely to go from here.

The worry du jour, of course, is the weaker European Countries--sadly, the acronym is PIGS: Portugal, Ireland, Greece and Spain--which are visibly in deeper trouble withtheir indebtedness. Especially Ireland, whose banks are looking weaker in the eyes of the world. This takes our minds off of uncertainties about the QE2 program to a degree--and elevates the value of the dollar against the euro--but it is ultimately just another odd flavor in the current economic jambalaya. It's dismaying. With so much governmental intervention, and so much of the confusion centering on what governments have done, it is tremendously difficult to predict where mortgage rates will be next week, much less in an hour or two.

But rates aren't moving far, and they show every sign of staying close to their recent levels. Good time, therefore, to let the rest of the markets wonder without certainty while you solidify any needed financing at interest rates that aren't likely to get a lot better.

“A resumption in house price declines, a still-tight credit market, and the struggling national recovery will limit housing demand growth through the rest of the year. But once the national recovery begins to accelerate, so will purchase applications. The final hindrance—falling house prices—will dissipate by the middle of next year, eliminating all the significant restraints on purchase applications.” [Michael Zoller, of Moody’s Analytics]

 KEY INDICATORS [11/17/10]

 Gold $1392.60/ounce [up]

Crude Oil(Brent) $87.99/brl [up]

U.S. Dollar to…

    Euro .7177 [up very slightly]

    Japanese Yen 81.72 [up]

6-mo Treasury Bill Yield 0.15%

10-yr Treasury Note Yield 2.66%

[6-month unchanged, 10-yr up 7 bps]

11th Dist Cost of Funds 1.663%[-]

30-yr Fixed-rate Mortgage 4.61%

15-yr Fixed-rate Mortgage 4.05%

1-yr ARM 3.72%

[HSH averages rates: 30-yr

down 3 bps;15-yr down 4 bps; 1-yr ARM up 1 bp]

 Mortgage Bankers Association Mortgage Applications Index

week ending 10/29

  Overall

    787.3 (down 5%; up 3.2%

the week prior)

  Purchase Money Loans

    178.9 (up 1.4%; up 3.9%

            the week prior)

  Refinancing Loans

    4328.8 (down 6.4%; up 3%

the week prior)

 Jobless Claims 10/30

    457,000 – prior week 434,000 – continuing claims at 4.340 m

 Employment Report Oct

    151,000 net new payrolls – unemployment rate still 9.6%

 Consumer Credit Sept

    Up 1.1% overall – nonrevolving up 8.2% - revolving down 11.4%

 

ISM Non-Mfg Index Oct

    Up to 54.3 from Sept’s 53.2

 Weekly Commentary

The team of economists of which Mr. Zolleris a part continues to believe that the nation’s economic recovery will gain strength in the coming year and that our housing prices will stop falling around the middle of the year. This belief is not shared by every economist, of course, but it seems significant that Moody’s Analytics predicted a slowing at about this point in the year, and that’s precisely what we’re getting. With a record of accurate forecasts, Moody’s predictions of the future are well worth paying attention to.

But what do we do with as complex a wild card as QE2? It seems there is no consensus among investors or economists regarding where quantitative easing will take us.

Lacking a clear sense of where we’re headed, markets are likely to remain volatile for the time being. One of the most telling evidences of the uncertainties in the market? The price of gold—which recently climbed above a record $1400. Gold, of course, is one of the ultimate safe harbors for wealth when the markets become nearly impossible to predict. To add complexity to the matter, though, gold lost a bit of value yesterday as investors seemed—for the moment, at least—to seek higher yields from their investments. That implies greater risk, and so investments in gold and Treasury securities suffered as a result. (The auction of Treasury securities was also slightly weak.)

The debt problems of the weaker European Union members are in the headlines again, with Ireland’s banks facing severe problems and Portugal’s debt threatening to spin out of control. This takes attention off the QE2 questions—and the doubts about the effectiveness of the quantitative easing program won’t be resolved for several months, at the least. The drama and static surrounding QE2 are likely to fade over time…so there is already room for more worries about the euro.

As best anyone can tell, interest rates are likely to continue jiggling in place for quite some time, waiting for clearer evidence of what the future might bring. It’s still a good time, therefore, to take advantage of these low rates.