Fed Interest Rates from two views:
Market Line
08/08/2007
Yesterday the Fed told us the biggest danger to the U.S. economy is still inflation and kept the Fed funds rate at 5.25%. Regarding the housing and mortgage markets the Fed merely stated that financial markets have been volatile in recent weeks, and credit conditions have become tighter for some households and businesses, while the housing correction is ongoing. And late yesterday afternoon a telling, but often overlooked report on consumer borrowing told us that consumer credit increased $13.2 billion in June to $2.46 trillion. This was after a $15.9 billion increase in May, reflecting that consumers are turning to credit card and non mortgage debt to maintain spending. This morning we are seeing the unwinding of the flight to quality bid the treasury market has experienced the past few days. The strong earning report from Cisco after the market close yesterday has lifted the spirits of equity investors who are now selling bonds to move back into stocks.
Information provided by Southern California Mortgage Exchange
Fed Softens Its Bias, Citing Growth Risks and Tighter Credit
Investor’s Business Daily (08/08/07) P. A1; Shinkle, Kirk (www.ibd.com)
The Federal Reserve voted for the ninth straight time to hold the federal funds rate steady at 5.25 percent at its Tuesday meeting, but it issued its first post-meeting statement that acknowledged problems in the credit markets. The central bank stated, “Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing.” However, the Fed once again noted “moderate” economic expansion and underscored its ongoing concerns about inflation. Some analysts believe the fact that the central bank is less biased toward inflation risks indicates that a neutral bias might be on the horizon, permitting rate reductions in the coming months; but others speculate that a steady stance on economic growth and the housing downturn makes it unlikely that the central bank will cut rates any time soon. Future traders indicated a 25-percent chance that rates would be lowered at the central bank’s Sept. 18 meeting, a drop from a 65-percent likelihood at the start of the week.
But, much more fun was the August meeting of the local Chapter of the Woman’s Council of Realtors http://www.wcrca.org/chapters/chapter28.asp , an affiliate chapter of the national organization http://www.wcrca.org/. It was “hat” day and the winner was our own Jon Lehre, Marketing Director of The Cal-Bay Mortgage Group with a very unique chapeaux from Silo & Linus. Can you believe that a guy won the contest???
The speaker was Victory Williams Turner from Victory Speaks Consulting Company on Negotiation techniques. She had several very good points that I would like to share:
- Know your facts…nothing more will turn off a buyer/seller (B/S) more than “bluffing” them about the house, the neighborhood, schools, etc. The old “knowledge is wisdom” saying will help you more than you can ever imagine in gaining credibility with your client.
- Understand the personality traits of your B/S. She highlighted the 4 types that we all should know : verbalizers, convincers, rationals, and reasonables and how to manage their expectations.
- Know your business etiquette. With all the different cultural groups now in the bay area we need to be more sensitive than-ever about ways to interact with our clients so that we do not offend.
- Read the body language of your client
- Watch out for “the take it or leave it close.” Give yourself plenty of room to negotiate.
- 80%/20% Rule with a different spin— 80% of the objections diminish the last 20% of time remaining to negotiate.
All in all a good time was had by all…..some time away from the difficult market that we are all finding ourselves in….
more tomorrow….
Denise