THE BASIS POINT

WeeklyBasis 01/16/07: Rates Higher on Post Holiday Spending

This holiday-shortened trading week, fixed and ARM rates are up slightly over last week after better than expected December retail sales. The strong retail report plus a surge in gift card sales during the holidays caused a bond sell off (which causes rates to rise). Bond traders were also betting January will be another strong retail month as people hit stores with their certificates. This week is critical to chart the direction of rates for the coming weeks. Nobody expects the Fed to change rates at their January 30 meeting, but consumer inflation data Thursday will help determine whether the Fed rate outlook shifts from an easing to a hiking bias. Also, we have housing data Thursday plus Apple, GE, Intel, Citigroup, and more report earnings throughout the week.

Conforming ($200,000 – $417,000) – NO POINTS
30 Year: 6.125% (6.265% APR)
10/1 ARM: 6.375% (6.515% APR)
5/1 ARM: 6.25% (6.4% APR)

Jumbo ($417,001 – $650,000) – NO POINTS
30 Year: 6.375% (6.515% APR)
10/1 ARM: 6.375% (6.515% APR)
5/1 ARM: 6.25% (6.4% APR)