Interest Rates will raise

A CLEAR PRESIDENTIAL WINNER EMERGED, OIL FINALLY DROPPED BACK UNDER THE $50 PER BARREL MARK, AND A SUPER-SIZED JOBS REPORT HIT THE SCREENS. Rates for various mortgage products moved up by .125% to .250%.
ON THE ELECTION FRONT…MORTGAGE BONDS WERE UNDER SOME SELLING PRESSURE AS STOCKS RALLIED, FOLLOWING THE ANNOUNCEMENT OF GEORGE W. BUSH EMERGING AS THE WINNER OF A HEATED AND VERY CLOSE RACE. Kerry’s concession finally removed the uncertainty from the financial markets, which had been benefitting bonds and keeping rates low. Less uncertainty= good for stocks, bad for bonds. With the election over, the bond market’s focus will shift back to economic fundamentals like job creation and the long term economic outlook.
ON THE OIL FRONT…AN INCREASE IN U.S. CRUDE OIL INVENTORY BROUGHT SOME CALM TO THE OIL MARKETS WITH THE PRICE OF CRUDE OIL NEAR A TWO MONTH LOW. Declining oil prices eased the bond-friendly concern that soaring energy costs will dampen economic growth.
ON THE JOBS FRONT…FRIDAY’S HIGHLY ANTICIPATED REPORT WAS A BLOCKBUSTER. While 175,000 new job creations were expected, a whopping 337,000 were delivered. Further- the strong revision of the September number, showing the previously reported 96,000 jobs was actually closer to 139,000, resulted in bonds taking it on the chin. If the jobs number had been lower, anxiety about the economy’s rebound would probably have stopped the Fed’s plans to raise its target borrowing rate as much as the market is expecting….traders are pricing in about a 50% chance that Alan Greenspan and his team will raise the rate to 2.25% by the end of the year after a .25% increase