UPDATE on RATE IMPROVEMENT

As I predicted several days ago, we did get an improvement in rates. Unfortunately, we also have the stock market retreating back to lower levels and great disappointment with the Treasury Bailout Plans. Market reaction: plans to help the banks move forward lacked details and just seemed to be more of the same. Details on the plan to help with mortgages has yet to be released. I now expect treasuries to trade in a narrow range as huge supplies are coming on to the market. Although our government's most recent auction of treasuries was supported this week, it will be tough to move such a huge supply. I expect the FED to be buyer of last resort behind the scenes.
For the next few weeks, I expect rates to be in a narrow range. I would advise your clients making purchases not to wait too long to lock in reasonable rates. Although the stock market is exceptionally weak today, I do not see a flight to bonds which may be telling us that buyers are not looking for safety today. A stock market rally may be evolving which will compete with bonds for money; thus rates could easily rise back up. Clients who choose to wait for that extra fraction of rate improvement might lose an excellent longterm rate.