Market Update – Weak Beige Book Report Will Strengthen Expectations of QE2

In economic news today, the weekly mortgage application index showed a decline in applications by 10.5% from the prior week. Later today, the Fed will release its Beige Book survey of the economy. Another weak Beige Book report will further strengthen expectations for the FOMC to announce a new quantitative easing program at its next meeting in two weeks.

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Market Update – China's Central Bank Raises Interest Rates

China’s central bank Tuesday raised interest rates for the first time in nearly three years. The People’s Bank of China said in a statement it will raise the one-year yuan lending rate to 5.56% from 5.31%, and the one-year yuan deposit rate to 2.5% from 2.25%. In other economic news, treasuries and mortgage bonds were down slightly from yesterday’s close amid speculation that more quantitative easing by the Fed will increase inflation.

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Market Update – Bonds Rebound With Expectations of QE2

Bonds are rebounding this morning as the market expects the Federal Reserve will begin asset purchases (Quantitative Easing Round #2) ahead of the FOMC meeting in 2 weeks . There isn’t much in terms of economic news this week, however, we will see several earnings releases from top firms in the financial sector. A few of the big headlines this week include today’s industrial production and tomorrow’s housing numbers.

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