Weak economic data reported this morning failed to keep the market down today, as credit conditions in the mortgage market continued to ease.  The market opened lower today after personal income and spending figures, along with durable goods orders were released.  However, the market then rallied after the slow start, resulting in a four day rally for the Dow, its first such rally in weeks.

In the Treasury markets, yields on 10 Year Treasury notes actually fell to below 5%.  This is excellent news for the mortgage market.  30 year mortgage rates are generally tied to the 10 year note, and tend to be about 200 basis higher.  As a result, mortgage rates are now close to 5%, their lowest since the early part of the decade.  This should help spur some re-financings, and that has reportedly been the case already. 

The problem in the real estate market, however, is the loss of equity that has occurred.  The latest Case-Schiller report indicated home prices in some major cities have fallen back to 2004 levels.  As a result, even though mortgage rates may be attractive, many people may not have enough equity in their homes to actually be able to re-finance their mortgage.  Typically, lenders will only re-finance up to 90% of the home’s value. 

In other markets, the energy complex managed sizable gains, reversing yesterday’s losses.  This is no surprise considering the rally in the stock market since last Friday.  Other commodities were mixed on the day.

The U.S. stock market will be closed Thursday for the Thanksgiving holiday, and will have an abbreviated session until 1 pm on Friday. 

On Sunday, our new weekly newsletter subscriptions covering the futures markets and our Ultimate Stock Trading System will begin.  Email for details!

Scott Cole