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The stock market right now is being rather affected by oil prices. As crude oil rises above $143 a barrel, the stock market is in a bit of trouble, falling as companies expect cuts into their profits. But this falling stock market news has another implication — that there will be an effect on mortgage rates.

The Mortgage Reports Blog has an interesting analysis of how the stock market has been almost directly affection mortgage rates:

The greater demand for mortgage bonds led to lower mortgage rates on conforming home loans and this would have never happened if the Fed hadn’t set the table for a mortgage bond market recovery.

This week, therefore, as the stock market goes, so should mortgage rates.

If stocks are up, rates should be up. If stocks are down, rates should be down. This is happening because — at least for now — the mortgage bond market is serving as a safe haven from Corporate America.

Right now (and for the past couple of sessions), the stock market has been down. And current mortgage rates are down.

Mortgage rates often follow the lead of US Treasuries. This is because the rates on bonds (especially the ten year variety) are more closely tied to the long term nature of home mortgage loan rates. But things have been a little crazy lately. In some cases, mortgage rates have been rising when tey should have been falling. And now, with the Federal Reserve trying to ensure a mortgage bond market recovery, the stock market has become tied to mortgage rates — for now at least.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

Tags: stock market, stock market news, investing blog, Federal Reserve,
mortgage rates, investments, mortgage bond market

Ben Bernanke isn’t in Barcelona right now, but his speech made earlier this morning was. And he has been speaking words meant to “build confidence” in the stock market right now — as well as the US dollar in forex trading.

Mortgage News Daily reports on Bernanke’s remarks concerning dollar weakness:

“We are attentive to the implications of changes in the value of the dollar for inflation and inflation expectations and will continue to formulate policy to guard against risks to both parts of our dual mandate, including the risk of an erosion in longer-term inflation expectations,” he said.

Bernanke also addressed other issues, including inflation and the housing market.

Stock market and Ben Bernanke’s remarks

Bernanke’s remarks also gave the stock market a bit of a boost. Bernanke insists that the second half of this year will see economic recovery, and that is adding optimism to the stock market, causing it to recover some of its losses from yesterday. Black Enterprise reports on what Bernanke said about the economy:

After the central bank’s recent interest rate cuts, loans to banks and tax rebates, the second half of the year should bring “somewhat better economic conditions,” Bernanke said in a speech in Spain. The economy faces headwinds, however, and the inflation picture remains uncertain, he said, indicating that the Fed still intends to keep interest rates on hold.

It is clear that investing decisions will have to take this information into account, and that investors in a variety of sectors will have to consider their moves — at least for now — in light of Bernanke’s comments.

However, I am skeptical of how long “boosting confidence” will keep the economy moving. Something solid will have to emerge soon in order to have lasting effect.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

Tags: stock market, investing news, investing blog, Ben Bernanke,
economy, investing, forex trading

Fresh on the heels of a speech on the difficult economy made by President Bush, the stock futures were a little lower this morning. However, thanks to some positive economic data, Wall Street is moving back up after a lackluster opening bell.

Federal Reserve expected to lower interest rates today

While the Fed is expected to lower interest rates, some feel that Wall Street will not be satisfied with the predicted cut of “only” 25 basis points. Indeed, another issue that has investors disenchanted is the expectation that this will be last rate cut in the recent cycle of monetary easing. The Fed is expected to end its series of rate cuts on the premise that inflation is becoming a concern.

So, stock market investors should pay attention to the rhetoric that accompanies the Fed interest rate decision.

Positive economic data boosts stock market

The GDP reading for the first quarter beat the estimates, and the jobs data is expected to show an addition of 10,000 jobs. This is good news for an economy that has been hit by plenty of bad news in the last few months. Additionally, some of the companies reporting earnings (notably General Motors — GM) aren’t losing as much as predicted. All of this good news — in addition to the bump expected when the Fed interest rate decision is actually announced is combining for an optimistic start to the day.

Other investments

It is worth noting that the US dollar is making some headway in forex trading, especially against the euro. Some think that it may have bottomed out, and is poised to regain its strength. And oil prices dropped this morning to $115 a barrel, despite warnings from OPEC that $200 oil could be on the horizon.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss.

Tags: stock market, stock market news, investing blog, Fed rate decision,
economy, investments, forex trading