“I DON’T MEASURE A MAN’S SUCCESS BY HOW HIGH HE CLIMBS…BUT HOW HIGH HE BOUNCES WHEN HE HITS BOTTOM.” General George S. Patton And the General himself would certainly consider Bonds to be a success last week, as they moved lower to hit a technical “bottom” at the 200-day Moving Average, but then bounced significantly higher throughout the course of the week, helping fixed home loan rates improve by about .25 to .375%.

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“COMMEND A FOOL FOR HIS WIT, OR A ROGUE FOR HIS HONESTY, AND HE WILL RECEIVE YOU INTO HIS FAVOUR.” Henry Fielding So honestly - was “rogue trader” Jerome Kerviel really solely responsible for costing French Bank Societe Generale $7.1 Billion Dollars…and for helping to trigger last week’s massive sell-off in global Stock markets? Or is the junior trader being played a fool, becoming the scapegoat to cover up financial mismanagement by the bank itself?

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“If you don’t like the weather, wait a minute”…That’s a saying heard often in places where the weather can turn on a dime, making it very difficult to forecast. And while the weather patterns can change direction quickly, the recent movement of stocks and bonds rivals the rides at an amusement park.

“Turbulent” and “volatile” best describe the action in the markets. Stocks and bonds have had wild swings of late as the possibility of a recession loom. The Federal Reserve is concerned about a recession, but doesn’t want to cut rates too deeply because it may stoke the flames of inflation. In a speech last Thursday, Fed Chairman Ben Bernanke signaled the Fed will step in with interest rate cuts as necessary in an effort to prevent a full-blown recession from taking place. It sure looks like the Fed will break off a 50 basis point (1/2%) interest rate cut in its battle to fight a potential recession when the Fed next meets to determine monetary policy on January 30th.

But remember that because Fed rate cuts may add to inflation pressures, home loan rates may actually increase after a cut by the Fed. We have seen this type of chilly response to Fed cuts many times before. Just back in September, the Fed cut by 50 basis points, but home loan rates worsened by 0.25% in just 3 days!

THE MARKET ACTION SURE IS HEATING UP, BUT IT MAY BE TIME TO PUT A FREEZE ON YOUR CREDIT PROFILE TO STOP IDENTITY THEFT. FIND OUT IN THIS WEEK’S MORTGAGE MARKET VIEW!

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