THE BASIS POINT

WeeklyBasis 01/29/07: Rates Higher to Curb Inflation Concerns

Fixed and ARM rates open this week up .125% over last week. This isn’t a bad climb considering that the 10yr Treasury note, has climbed almost .5% since early-December. The biggest market event this week will be Wednesday when the Fed’s rate decision is reported. It’s unlikely we’d see a surprise rate hike, but their forward-looking statement is what markets are waiting for. Given the stronger-than-expected economic date over the past 6 weeks, it’s likely the Fed statement will warn about inflation risks. Markets would interpret this as a rate hiking bias and rates would go higher. Markets will also be trading on two other inflationary measures this week: consumer income & spending data Thursday, and the all-important January jobs & wage growth report Friday.

Conforming ($200,000 – $417,000) – NO POINTS
30 Year: 6.25% (6.39% APR)
10/1 ARM: 6.5% (6.64% APR)
5/1 ARM: 6.375% (6.525% APR)

Jumbo ($417,001 – $650,000) – NO POINTS
30 Year: 6.375% (6.515% APR)
10/1 ARM: 6.5% (6.64% APR)
5/1 ARM: 6.375% (6.525% APR)