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The week that was:

Markets were treated to comments all through the week that the recession is over; Bernanke and Warren Buffet got the ball rolling at mid-week and added more conviction that worst is behind the economy. Even though Bernanke and many others have repeatedly said growth will be slow and likely the “new normal” will keep unemployment high for the next couple of years.

Freddie Mac weekly results of its Primary Mortgage Market Survey® reported that 30-year fixed-rate mortgage (FRM) averaged 5.04 percent with an average 0.7 point for the week ending September 17, 2009, down from last week when it averaged 5.07 percent. Last year at this time, the 30-year FRM averaged 5.78 percent.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.51 percent this week, with an average 0.5 point, up from last week when it averaged 4.51 percent. A year ago, the 5-year ARM averaged 5.67 percent.

August housing starts increased 1.5%, highest level since November 2008. However, most of the starts were in multi-family and not single family.

The week that will be:

The FOMC meeting concludes on Wednesday. Nothing on the economic calendar until Thursday and Friday; weekly claims, August existing home sales, August new home sales, August durable goods orders. Treasury supply will dominate; over the past three months investors have been bidding well for treasuries at the auctions, foreign buyers continue to support the US growing budget deficits. Will the demand continue to remain strong?