THE BASIS POINT

WeeklyBasis 11/04/03: Fastest GDP Growth In 20 Years

Rates and commentary below are as of November 4, 2003. Rates are up about 0.125% overall from last week. Not bad considering that 3rd quarter GDP grew at its fastest pace in nearly 20 years. This lofty economic growth figure posted last Thursday presumably would have had a more negative affect on the bond market (causing rates to rise), but the market is still looking at the jobless situation. Estimates for this Thursday’s Employment and Payrolls reports are that there will be little improvement in the unemployment situation. Here is what John Challenger of Challenger, Gray & Christmas (the company that produces the monthly report on job cuts) says about the near-term job market: “With factors like technology, outsourcing and consolidation working against job creation, any job market rebound we see in the near future will be relatively small”. This may encourage investors to stay with more conservative bond holdings, and help to keep rates low. However, this week and the coming weeks will be somewhat volatile for rates as the market tries to figure out whether current economic improvement is long-term or temporary.

Conforming ($50K – $322,700K) – NO POINTS
30 Year: 5.875% (6.015% APR)
15 Year: 5.125% (5.265% APR)
5/1 ARM: 4.875% (5.025% APR)

Jumbo ($322,701 – $650,000) – NO POINTS
30 Year: 6.25% (6.39% APR)
15 Year: 5.5% (5.64% APR)
5/1 ARM: 5.0% (5.15% APR)