Daily Market Update 7/22/08

Mortgage rates remained near 11 month highs as Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank should increase rates “sooner rather than later” to head off inflation. Separately, Treasury Secretary Paulson suggested that Fannie Mae and Freddie Mac might need a support package from the government. The Congressional Budget Office estimated the likely cost of such a package would be $25 billion, but could exceed $100 billion depending on the length and severity of the housing downturn. The messages from both speakers hurt mortgage-backed securities markets. Oil prices resumed their recent downward trend, plummeting to $125 a barrel, a 14% drop over the past week. No major economic reports are due out today.

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