Weekend Commentary

On Tuesday the Federal Reserve raised its short-term lending target for a 12th time since June 2004, taking it to 4%, its highest since mid-2001 and indicating that more hikes can be expected in next meetings. The Fed continues to view inflation as the biggest risk to the economy.

As a result treasury yields rose. Yesterday the 10-year government note was down 10/32 at 96 24/32, shaving more than $2.50 per each $1,000 worth of securities at face value. The note was yielding 4.65% and neared the year's high of 4.68% set in late March.

The 30-year loan had an average rate of 6.31% for the week through Nov. 3. This is the highest since it reached 6.32% in mid-June 2004. The rates were at 6.15% last week and 5.7% a year ago.

The average for the 15-year fixed-rate mortgage was 5.85%, up from last week's 5.69% and last year's 5.08%.

One-year Treasury-indexed Adjusted Rate Mortgage (ARMs) averaged 5.09%, up from last week's rate of 4.91%. This is the highest since March 29, 2002, when it was 5.11%. At this time last year, the one-year ARM averaged 4%. Five-year Treasury-indexed hybrid ARMs averaged 5.76% this week, up from last week when it averaged 5.63%.

Light sweet crude for December delivery was recently down 68 cents at $61.10. It closed at $61.78 a barrel on the New York Mercantile Exchange Thursday, up $2.03, as prices made their biggest one-day gain in over six weeks.

Yesterday the dollar pared gains before bouncing back. It was flat against the euro at $1.1941 after turning lower on the report. Against the Japanese yen, dollar edged up 0.2% to 117.57.

Yesterday Gold futures saw early gains fade. The benchmark December contract was last down 30 cents at $461.60, off a morning high of $465.70.

[Mortgage information source: Freddie Mac weekly report]