WeeklyBasis 10/20/03: Can Tax Cuts Support Economy?

Rates and commentary below are as of October 20, 2003. The Conference Board’s Index of Leading Economic Indicators was released today (the biggest economic news scheduled this week). Today’s release showed the economy cooled in September as mortgage rates rose and the tax cuts were spent. This follows huge growth months in July and August when the effect of tax cuts and the mortgage-refinancing boom were strongest. Now that the impacts of tax and low-rate stimulus plans have been mostly felt, retail sales will be one of the most-watched indicators going into the holidays. This will be a critical indicator showing whether consumers can continue to bolster the economy. Throughout this week, we may see rates move up as bond investors lighten positions ahead of next Tuesday’s Fed meeting (during which policymakers are expected to leave rates unchanged).

Conforming ($50K – $322,700K) – NO POINTS
30 Year: 6.0% (6.14% APR)
15 Year: 5.375% (5.515% APR)
5/1 ARM: 4.875% (5.025% APR)

Jumbo ($322,701 – $650,000) – NO POINTS
30 Year: 6.375% (6.515% APR)
15 Year: 5.75% (5.89% APR)
5/1 ARM: 5.0% (5.15% APR)