The big news today is that Fed’s Open Market Committee has issued its regular statement (here), though the cartoons are just ducky.

They left their benchmark interest rate unchanged, but issued a rather positive statement about how things are getting better, and that they would be phasing out their purchases of mortgage backed securities:

To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010.

(emphasis mine)

Their announcement that the purchase program will be terminating in about 6 months has increased demand for Treasuries, driving their yields down today, but over the past week, before their announcement, mortgage rates have fallen below 5% for the 30 year fixed (!), pushing mortgage applications are up.

I don’t think that the low mortgage rates, or the level of mortgage apps will remain where it is for long, now that the Fed is shutting down its program to bid the rates down.

Meanwhile, in the only non-corrupt petro-state on earth, the Norwegian Central Bank has kept deposit rates at 1.25%.

I’m not sure what this means for real estate, though because the US and the rest of the world seem to be going in separate directions, with Manhattan rents dropping 8% over the previous year, and the Paris, France office market showing signs of a real revival.

It confuses the hell out of me.

In any case we do have some numbers heading in the same direction, with the European manufacturing and services industries index rising to 50.8, with any number above 50 being expansion, and US seen vehicle miles driven, as reported by the DOT are up too.

On the flip side, we have credit card defaults hitting 11.49%, in August, up almost a full percent from July’s 10.52%, the 25 biggest US retailers looking to cut back on holiday hiring, and mass layoffs in August rose to 2,690 with 259,307 people losing their jobs.

In energy and currency, oil fell on rising inventories, and the dollar remained near yesterday’s lows.