Friday's Final Update. Treasuries got a mild lift this morning from an investment shift away from declining stocks. The stock move was largely a reaction to a spike in oil prices; however, the major economic news of the day was stock-friendly and oil moved off its highs of the day. These developments eventually allowed stocks to find their footing and they closed narrowly mixed. The recovery in stocks and the bullish housing news undercut the support for bonds and Treasuries finished with losses.

In late trading, the 10-Year Treasury Note was down by 8/32, raising its yield to 3.84%; the Dow was down by 5.86 points to 12,986.80; and the Nasdaq was down by 4.88 points to 2,528.85.

We experienced large swings in the bond market and at the end of the week interest rates on government and conventional loans changed by about 1/8 of a discount point(after all the ups and downs 1/8 of 1% better in price). This market is difficult to predict. With a slowing economy interest rates should be at their lowest level's but because of the appearance of inflation and problems caused by bad mortgage's, investors are afraid to buy and hold Mortgage Back Securities. If you see a rate that work's for you "Lock It".

Have a wonderful weekend.

 

Confidence among U.S. consumers fell in May to the lowest level in almost 28 years as record-high fuel prices, lower home values and fewer jobs rattled Americans. The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 59.5, the weakest level since June 1980, from 62.6 in April. The measure averaged 85.6 in 2007.

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 2 percent.

Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.

Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred no change in the target for the federal funds rate at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 2-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Atlanta, and San Francisco.

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