Refi’s jump/China slows/Spain still thinking

Responding to the new record low in mortgage rates, the MBA said for the week ended 9/28 that refi’s jumped 19.6% to the highest level since Apr ’09 and 40% above the 12 month avg. The rise in purchase apps were more subdued, up by 3.9% but to the most in almost 4 months and is 5% above its 1 yr avg. The direction of inflation from here, post endless QE, will determine the longer term sustainability of the Fed’s new attempt to artificially suppress interest rates. In Asia, China’s PMI services index fell to 53.7 from 56.3, the lowest in its short 19 month history. While the Shanghai index was closed, the Hang Seng didn’t respond much to it, rising .2% after a short holiday. Australia, an economic Chinese proxy, said its trade deficit widened to the most since Mar ’08 as total exports fell to the lowest since Feb ’11 with merchandise exports specifically to China falling to a 6 month low. In Europe, the Spanish Economic Minister gave details on the bad bank being set up but on the request for more EU help said they “must consider all consequences before a bailout decision.” The final Euro zone mfr’g and services composite index was little changed with the preliminary with Germany’s services index remaining below 50 and France’s falling to 45, giving back all of the Hollande honeymoon jump in the summer.

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