End of January Brings Volatile Market DataJan 25 2010
January 25, 2010 - Last week saw mortgage rates improving as concerns mounted over the strength of the economy in light of a waning stock market and new proposed financial regulation for banks. Releases continue to highlight a very subdued recovery with concerns growing about the possibility of a double-dip downturn. The Obama Administration proposed increased oversight and taxation for bank's riskier loans and proprietary trading operations. If enacted it is most likely the costs of these new taxes will be passed through by banks to businesses and consumers.
Last week leading economic indicators rose 1.1% for the month of December. Rising for the ninth straight month, eight of the ten indicators showed improvements, signaling that this widespread increase is pointing the economy to recovery. However, many were concerned indicators could stall over the winter months. The December producer price index rose to a seasonally adjusted 0.2%, with a sharp increase in food costs. While core producer prices remained unchanged for the month, food and energy costs showed continued volatility.
This week is a important week for markets. The stock market has its worst week since last March and will likely have heightened volatility this week. The Fed also meets with analysts this week and will likely shine some light on the future of its MBS security purchase program.