Bob Howe
Senior Loan Consultant
Residential First Mortgage
(949) 852-0400 ext. 219
bhowe@OrangeCountyLender.com
www.OrangeCountyLender.com

U.S. Treasury Bonds
Maturity Yield Last
Week		 Last
Month
5 Year 4.36 4.43 4.54
10 Year 4.45 4.51 4.60
30 Year 4.65 4.71 4.79

Treasury Market Summary: 

 

April Fooled? : The market got bounced pretty around hard today in otherwise light action as rumors & surprise trade issues rattled global markets. Data did not help any as most was bond negative, with week, month & quarter-end issues keeping a floor under prices. The trade saw the shorter maturities carve out about 13 basis points on the session with the 10-yr knocking out nearly 9 bps.  The week ahead has a batch of data, including the all-important payrolls report, but the calendar is stunted with markets closed Fri for a holiday, while bond soldiers will be brought in for a brief session that will likely see trade over at 8:45, well before the official 11:00 closing bell.  The market will be wary as data hits through the week, with today's huge miss on Chicago PMI really throwing a wrench in things, while estimates have been ratcheting up on some other non-manufacturing reports.  The good news is Japan will be back in play which should help bounce prices, but the specter inflation (both in the form of lip service & climbing commodity prices) will work as a counterweight regardless of the week's early reports. The curve trade in the 2-10-yr yield spread ended up near the week's average price at 3.1 after spending most of the week in an effort to reach steeper levels. The buck had a wild session with strong gains off friendly data quickly erased as the China trade news hit the wires & dollar selling amid quarter-end fixing took its bite. Spot gold closes the week up at 664.85 (+3.35 on the day) while crude oil soared to 65.87 (-0.16). Next week brings the ISM's both manufacturing & services, factory orders & the always entertaining payrolls report. The Fed calendar is light so far with just Poole & Fisher making appearances.
 

Economic Indicators for this week that could impact the mortgage or real estate markets include...

Deduct This
 

Don't miss these new ways to save on your 2006 tax returns

Tax returns for 2006 contain a variety of new opportunities that you can use to slash your tax bill. But you must make choices and take actions to benefit from these breaks:

 

Speed up deductions for equipment purchases. If you bought and placed into service any machinery, office furniture, computers or other equipment in 2006, you can elect first-year expensing, called the Section 179 deduction. This allows you to immediately deduct the cost up to $108,000 (up from $105,000 in 2005), instead of depreciating it over five, seven or more years as fixed by law. You can claim the deduction even if you finance some or the entire purchase price.


Suggestion: Don't elect expensing if 2006 was not profitable; you'll still qualify for depreciation for the expenditure, gaining a tax benefit in future profitable years.

 

Save for medical costs. If you had a high-deductible health plan for 2006 to cover medical costs after satisfying a significant deductible, you can make tax-deductible contributions to a savings plan, called a health savings account. The cap on deductible contributions for 2006 is $2,700 for self-only coverage or $5,450 for family coverage. If you were 55 years old or older by the end of 2006, you can add an additional $700 to the account. Funds in the account accrue on a tax-deferred basis and can be withdrawn tax free to pay medical expenses not covered by insurance.   

 

Note: You can contribute to an HSA for 2006 through April 16, 2007.

 

Save for retirement. It's not too late to shelter income and save for retirement by making tax-deductible contributions to retirement plans for 2006. If you had set up a profit-sharing or 401(k) plan for 2006 by Dec. 31, 2006, you can make your contributions up to the extended due date of your return (Oct. 15, 2007). Didn't sign any paperwork by the end of the year? You can still create and fund a Simplified Employee Pension plan by the extended due date of your return.   

 

Caution: Business owners usually must contribute on behalf of employees, an added cost that is somewhat mitigated by a deduction for the contributions from business income.

 

Write-off car expenses. If you use your personal car for business travel, deduct your car expenses using the method that affords the greater write-off. Your options: Deduct the actual costs of operating your car for business (such as gasoline, tires and repairs), provided you can prove your expenditures for the car; or rely on an IRS standard mileage rate of 44.5 cents per mile. Both options apply whether you own or lease your car.   

 

Bonus: Either way, you can also deduct parking and tolls for business travel.

 

Claim your telephone excise tax refund. The federal excise tax paid on long-distance service after Feb. 28, 2003, and before Aug. 1, 2006, is refundable on 2006 returns. Individuals and Schedule C filers can claim their actual tax payments or rely on a standard amount based on the number of exemptions in the household: $30 for one, $40 for two, $50 for three and $60 for four or more. Other businesses can claim a refund of their actual tax or use a simple formula provided by the IRS. To figure this one-time refund, use IRS Form 8913, Credit for Federal Telephone Excise Tax Paid.

 

One should consult with a qualified tax planning professional prior to implementing any tax planning strategies. If you are a real estate planning, insurance, mortgage or financial planning professional receiving this newsletter, please call our office and introduce yourself to us.  We are always seeking to grow our referral network and expose more service professionals to our client base.