WeeklyBasis 02/23/04: Oil Prices and Bond Sell-Off Keeping Rates Low

Rates/commentary for the week of February 23, 2004. Higher-than-expected consumer prices (CPI) released Friday caused a slight bond sell off, but rates held near all-time lows for today’s open. Higher CPI usually means inflationary pressure and higher rates are looming, but Friday’s figures were due largely to oil prices which tend to include artificial valuations set by producers. In other words, the CPI increase so far looks more like an isolated incident than a trend. As for market-moving economic reports this week, Consumer Confidence comes out tomorrow and Q4 GDP comes out Friday. But the biggest rate activity this week is likely to come as Fed chairman Greenspan delivers a few speeches he has scheduled. He is likely to reiterate how household debt levels are in “good shape.” The reaction could be slight rate increases as investors sell bonds and buy equities on perceived confidence about consumer strength.

Conforming ($50K – $333,700K) – NO POINTS
30 Year – 5.5%
15 Year – 4.75%
5/1 ARM – 4.375%

Jumbo ($333,701 – $650,000) – NO POINTS
30 Year – 5.75%
15 Year – 5.125%
5/1 ARM – 4.625%