Liberty SBF Interest Rate Commentary For 1/15/14

January 15, 2014

More big news about Federal Reserve players last week when Obama nominated Stanley Fischer as Governor and Vice Chairman of the Federal Reserve, the post Janet Yellen will leave when she becomes Chairwoman in February. The former governor of the Bank of Israel is credited with keeping that country out of the mess the rest of the world fell into during the Great Recession. Economists are excited about Fischer, according to Business Insider. You can get a primer on Fischer here.

If you worry about how much money the Federal Government is in debt then this might be good news. A record budget surplus of $53 billion was reported by the Treasury Department for December. A combination of lowered spending and higher revenues (coming from taxes and $40 billion from Fannie Mae and Freddie Mac) helped. For FY 2013, the government reported that the deficit was at about $680 billion.

“…It was the first gap of below $1 trillion of Barack Obama’s presidency,” reported Market Watch.

Economists are predicting that the 10-year Treasury will test the high end of a range between 2.82-2.98% all week. And pundits are saying that the bond market’s reaction to fourth quarter retail sales and November inventory growth was limited on Tuesday. Not much else seems to be on the horizon until the Federal Reserve meets again on Jan. 29. Otherwise corporate earnings and housing data will carry the week. Until then, the expectation is that the 10-year will not come near 3% again and will remain between its current level and 2.98%.

As one expert predicted, “The longer 10-yr UST stay below 2.92%, the more latent volatility increases for the last week of the month.”

Continued woes in the business sector over Obamacare and the disfunction in Washington is a sure bet so economists will have to look elsewhere for good news. They thought employment was a bright spot but when the Labor Department report came out on Fridayshowing only 74K jobs were added in December (most expected 200K), hopes dimmed again. Stocks, the big winner in 2013, are being put under the microscope as some are saying there is a danger of their being overvalued. In a note, Goldman Sachs’s David Kostin called the S&P 500 Index “lofty.”

2014 is very young, but the year’s economic news is already proving difficult for investors and economists to digest.

Commercial Mortgage-Backed Security Loans (CMBS) Rates

3.88% I 5 YEAR FIXED
5.37% I 10 YEAR FIXED