In The News...

A proposed bailout plan for the Big Three automakers is back in the news as Congress reviews three separate survival plans presented by Chrysler, Ford, and General Motors. Chrysler and GM say they need an immediate capital infusion to stay in business to the end of this year while Ford is asking for a $9 billion "standby line of credit." We may see a vote on a bailout package for the automakers next week.

Third Quarter Productivity was revised to a higher than expected 1.3% from the previously announced level of 1.1% and higher than the consensus of 0.9%. Higher productivity helps hold inflation in check and is a plus for the bond market.

A nonmanufacturing gauge of the US economy was released today showing that there was contraction last month in the service sector to the lowest level since data began being compiled. The ISM Services Index fell to 37.3% in November from 44.2% in October. The decline was worse than the 42% that was expected.

There is some good news in this environment - mortgage applications surged last week after the government said that it would begin purchasing Mortgage Backed Securities to the tune of $500 billion. Mortgage applications rose a whopping 112% compared with the week before. Applications to refinance an existing loan rose 203% last week. Mortgage applications to purchase a home rose a seasonally adjusted 38.0%.

Brought to you, courtesy of The Mortgage Market Guide