In an odd turn of events, the major equity indices are actually trading higher in advance of the release of the Federal Reserve Open Market Committee (FOMC) comments. While the US is still struggling economically, our problems seem to be mild compared to other developed nations right now. Russia's government is throwing everything (including the kitchen sink) at the ruble to try and fix the damage done to its currency. The Russian finance ministry stepped in to buy rubles after the currency was destroyed yesterday, only to gain about 8% of its value back against the dollar today. Russian citizens and businesses on the other hand, are taking matters into their own hands and are buying up as much foreign currencies as possible to hedge against the ruble dropping further. The biggest news of the day so far was President Obama's comments announcing significant changes in diplomatic measures between the US and Cuba. The market responded well to these comments, but we will see how well they respond to Janet Yellen's statements later today.
While not a massive market mover, the Mortgage Bankers' Association's (MBA) weekly reading on mortgage applications shows just how much the housing sector has oscillated in the past year. During the week of December 12, a sharp drop in mortgage rates failed to lift overall mortgage activity with the purchase index falling a steep 7.0% and the refinance index was left unchanged. However, there was an 11.0% pickup in government refinance applications led by a 16.0% rise for VA refinance applications. The purchase index proved to be negative for home sales once again as the index declined 5.0% year-over-year in the week. Also, the average 30-year fixed mortgage for conforming loan balances ($417,000 or less) fell by 5 basis points in the week to 4.06% to the lowest rate since May last year. We'll be keeping a lookout for what the Fed says this afternoon as their plans may damper (or boost) mortgage growth in the coming weeks.