Juicy Estates

Chinese Gold Moving U.S. Mortgage Interest Rates

April 24th, 2009 by James Venney
Categories: Home, Interest Rate Updates, Mortgage News
Comments: 3 Comments »

gold-bars-move-miami-mortgage-rates Larry Baer of Market Alert is in my opinion the most astute analyst when it comes to parsing global economic activity and it’s effects on mortgage interest rates. Below is an excerpt from his daily commentary which concisely explains why Chinese investment in Gold may move U.S. mortgage interest rates higher over the next two weeks.

“I look for the upward pressure on mortgage interest rates to be a bit more intense during the coming week given this morning’s news of a sharp rise in Chinese gold reserves. The big “so what” factor here is that swelling Chinese gold reserves probably represent a new strategy of diversification by China – which by extension could logically mean the Chinese will be buying relatively less in the form of US Treasuries obligations in the future. Granted the Fed currently has the financial firepower to take up some of the slack caused by the potential of reduced Treasury auction participation by the Chinese – but only for a limited amount of time. You can be this event will be closely monitored for further developments by mortgage investors. You can also bet mortgage investors will likely be very hesitant to push mortgage interest rates sharply lower until the Treasury auctions of the next two weeks are complete — and the participation levels of foreign investors can be clearly assessed.”

The week ahead is pack full of economic data and coupled with Larry’s analysis above should prove to be critical for those managing rates locks.

This entry was posted on Friday, April 24th, 2009 at 9:17 pm and is filed under Home, Interest Rate Updates, Mortgage News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.