In The News...

The Senate passed a new version of the $700 billion rescue plan last night by a 74-25 measure, and authorizes the Treasury to buy illiquid assets from banks in an effort to thaw out frozen credit markets and to free up banks to start lending again. The plan includes a provision to increase the FDIC insurance cap to $250,000 from $100,000. It would also extend a number of renewable energy tax breaks for individuals and businesses. The bill expects to go back to the House of Representatives Friday after it rejected the former version on Monday.

The chance of an interest rate increase has increased at the FOMC meeting on October 29 amidst all of the economic turmoil. The Fed funds futures are currently pricing in a 70% probability for a 50bp rate cut by the Fed's next FOMC meeting on October 29 and a 25% probability for a 75bp rate cut by the December 16 FOMC meeting. Fed Fund Futures predict movement of the benchmark Federal Funds Rate, which currently stands at 2%.

Weekly jobless claims remained at their highest level in seven years. For the week ended Sept. 27, seasonally adjusted first-time claims for unemployment benefits rose 1,000, to 497,000 - the highest level since late September 2001.

The four-week average of claims rose 11,500 to 474,000 -- the highest since October 2001.

For the week ended Sept. 20, continuing claims rose 48,000 to 3.59 million -- the highest since September 2003.

The four-week average of continuing claims rose 46,750 to 3.53 million -- the highest since October 2003.

Brought to you, courtesy of The Mortgage Market Guide