Market Watch 12-15-2009

Mortgages continued to slide this morning on the announcement that producer price index figures rose all most double that what was expected rising by 1.8%. However, the large portion of this increase can be attributed to a sharp rise in oil prices during the review period. Oil prices in November breached the $80 per barrel mark but have retreated to around $70 per barrel as of today. Inflation cannot happen if over 10% of the US citizens are unemployed…hard to drive prices up when a large portion of America is unemployed and I would say there is probably another 7% which are under employed.

Tomorrow is the “big day” as the Bernanke’s two day FED party ends at 2:15 EST. The market will continue to look for any hint that either the FED will stop buying investment assets or that they may be looking to raise rates soon. I believe that this is a very remote possibility but still a possibility. If they were to do either of the before mentioned things, look for rates to move sharply higher….again…I doubt that this will happen but keep your eyes on the market after 2:15 pm tomorrow….Assuming I am correct and they continue on their current course, look for rates in improve slightly but nothing to get too excited over. Fixed rates today remain in the 4.875% range while 5 year ARMS are running in the 3.50% range!!!