THE BASIS POINT

WeeklyBasis 03/22/04: Terrorism in Spain Affecting Rate Outlook

Rates/commentary for the week of March 22, 2004. I am back in the saddle after my wedding and two amazing weeks in Hawaii. While I was away, a dismal jobs report caused rates to drop below all-time lows from May 2003. This news would usually correct itself as investors realize all other economic fundamentals are sound. But the “3/11” terrorist attack in Spain, along with geopolitical unrest in the Middle East and Taiwan, have been causing investors to move out of higher risk equities (especially stocks with travel industry exposure) and into safer bonds; higher bond prices mean lower rates. This week, nine public appearances are scheduled for senior Fed officials, two of which are by Alan Greenspan. This along with personal income and consumer sentiment data releases on Friday will have the most impact on rates.

Conforming ($50K – $333,700K) – NO POINTS
30 Year: 5.375% (5.515% APR)
15 Year: 4.625% (4.765% APR)
5/1 ARM: 4.25% (4.40% APR)

Jumbo ($333,701 – $650,000) – NO POINTS
30 Year: 5.625% (5.765% APR)
15 Year: 5.0% (5.14% APR)
5/1 ARM: 4.25% (4.40% APR)