AJ's ECONOMIC BUZZ           February 12^th, 2007

Alan "AJ" Nisen    My goal is to build lifetime relationships with every client!
Bank of America Mortgage
Direct:   1.925.963.5836
Work:    1.925.688.3820
Fax:        1.925.688.3829
aj.nisen@bankofamerica.com
www.nowville.com/aj.nisen

Last Week's Economic Retrospective:
New Bond issues offered at auction last week by the US Treasury were well received.  Bond auctions are an important to gauge investor market prediction.  For example; lackluster buying usually means buyers predict rates will be higher in the near future.  But last weeks well received auction by both US and foreign investors indicated investors saw the rate market remaining somewhat stable ahead.  Foreign buyers tend to favor US Bonds because they see US Bonds as a safe, high rate of return monetary instrument.  Continued foreign investment in our Bond market has helped keep Bond prices high, yields low and therefore, home loan interest rates low. Based on the good result of the auctions, Bond prices and home loan rates did improved throughout the week, but then lost some ground Friday to end where they started.

On Friday, some traders decided to sell bonds and take their profits. Additionally, there were several Fed officials on making speeches including St. Louis Fed President William Poole. Mr. Poole mentioned increased defaults in home loans to risky borrowers and also said that rates may rise as a result.  The talk of rising home loan rates was enough to spook Traders ahead of the weekend and many decided to take an early leave from the bond market.

This Week's Economic Forecast:
The week ahead has a host of potentially market-moving reports.  On Valentines Day, the Retail Sales report will be released.  What we want to watch for here is the effect of Christmas gift cards expenditure.  Gift cards were such a hot holiday item.  If many Gift Card recipients went on spending sprees in January, the Retail Sales number might be high which could pressure home loan rates higher (i.e. Inflationary fears).

My prediction is Treasury Bond prices will likely trend a little lower this week causing Bond yields to fall and home loan rates to worsen unless we get some Bond friendly news. 

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AJ Nisen

Alan "AJ" Nisen, MBA, Notary
Lafayette Chamber of Commerce Board
Orinda Chamber of Commerce Board
Alamo Merchants Professional Association Board
Danville Chamber of Commerce
Lafayette Rotary

Thank you for your interest in starting a mortgage a conversation with me.  Remember, Bank of America has Industry leading low rates and is a full service bank. Bring me any mortgage offer to compete with to see what we can do for you.  I look forward to serving you in the future!