Today's financial news and commentary

In the markets, yesterday was a relatively quiet day. Rates are still low, and the stock market improved somewhat, which tends to make the US populace feel a little better about things. In fact, in spite of the profit margins, interest rates for 30-year fixed-rate mortgages are near last May’s levels. And 15-yr rates, where interestingly enough the principal portion of the early payments is about half of the total P&I, are the lowest in decades. So these rates, combined with the potential end of the $8,000 tax credit and some great pricing, are certainly helping to stabilize home sales. New home sales are the highest they’ve been in a year, and inventories are the lowest they’ve been in decades. One cloud on the horizon, as it always is, is this week's Treasury auction. Or, put another way, with the supply this week don’t look for a big drop in rates unless the stock markets continue their downward path, which may be unlikely. Yesterday we had $7 billion of 10-yr TIPS, today we have $39 billion of 3-yr notes, tomorrow $20 billion of 10-yr, and on Thursday $12 billion of 30-yr. bonds. Without much other news, we find the 10-yr currently yielding 3.24% and mortgage security prices about unchanged.

Well, in a nutshell there you have it. So what's the guess? My guess is buy real estate. Or maybe gold. Or maybe currencies of emerging countries such as China or India. Whatever you do, the dollar is fading. The government needs to shore it up by quit printing and spending money that we don't have. But that's just my opinion. Washington will probably extend, to some degree, the $8,000 tax credit for first time home buyers. Also, there maybe a new "cash for clunkers" in the works as well. But be careful. That money is taxable.