Yesterday the US stock market took
a huge hit, this morning the selling continues in all global markets but in
very early activity prior to the open at 9:30 the key US indexes were
unchanged. Markets very concerned about this weekend’s vote in Crimea on a
referendum to secede from the Ukraine and join Russia. Russian troops still on
the border. China’s economic slowing is also roiling global markets; the
combination of the two concerns sent interest rates lower yesterday on safety
moves and hedging against possible continued selling of stocks.
The double barrel uncertainty
(China and Russia) has stepped up market volatility this week
and will likely continue next week into the FOMC meeting conclusion on
Wednesday. Secretary of State Kerry told a Senate panel in Washington
yesterday that the U.S. and Europe will take “very serious” steps the day after
the Crimea vote “if there is no sign” of a resolution to the crisis. Russian
President Vladimir Putin is preparing to “invade eastern Ukraine,” Estonian
Defense Minister Urmas Reinsalu said by e-mail today. Likely neither of the two
scenarios will occur rapidly, if at all. Kerry will meet with his Russian
counterpart today, hoping to ease the situation in Crimea as the clock ticks
down to a referendum
The 10 yr note yield declined to
2.58% on Feb 3rd when the January employment report was released; this morning
the 10 at 2.64%. From a pure technical perspective 2.58% will render strong
resistance. From a fundamental perspective, if the situation with Russia leads to
an economic slowing and China’s economy continues to show weakness the rate
markets could decline a lot further. Looking to next week, the FOMC meeting on
Tuesday and Wednesday with the Fed widely expected to taper another $10B taking
the total tapering to -$30B from $85B a month.
Still no concern that rates will increase in the short term. I suggest that you continue to float your rate unless you are closing in the next week. Continue to follow my BLOG for all related updates concerning Houston, Spring, San Antonio, Dallas, and Austin including all other cities in Texas.
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