RE-AL NEWS

This week put fairly continuous upward pressure on mortgage rates. We have inched up about .25% within the last two weeks. This upward pressure has been fueled by inflation fears in China, some higher than expected economic reports in the US (i.e., retail sales and Philadelphia Fed Manufacturing Index) which were slightly positive t...owards the economic recovery, and QE2 – the Fed’s new bond and treasury purchase program. Again, one of the goals of QE2 is to create some mild inflation to offset the fear of deflation in the US, and bond investors are a bit nervous about that. Next week, the Treasury has announced that it will auction $99 Billion in 2, 5 and 7 year notes. Considering it's a holiday-shortened week. which will result in a reduced amount of trading, we could see the bond market even a little more volatile than it has been. Stay tuned.