Daily Market Update 9/17/08

Mortgage rates jumped late yesterday after the Fed announced it would hold the Fed Funds Rate steady, rather than reduce it by 1/4%, as many traders had expected. Market activity this morning has focused on an agreement by the Fed to loan AIG, the world’s largest insurer, up to $85 billion for two years. AIG is expected to restructure and sell assets to repay the loan in what is being dubbed a “controlled bankruptcy”. Housing Starts fell to their lowest levels since 1991 as the inventory of unsold homes remains high. Stocks moved sharply lower. Mortgage-backed securities’ prices remain extremely volatile while investors attempt to analyze the recent spate of economic news.

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