Market commentary

Tuesday, U.S. Treasuries closed at their lowest yields since April 2009, with the yield on the benchmark 10 year note briefly touching 2.95%. This morning bond prices have backed off, however, the 10 year note yield remains below 3% at 2.99%.

The ADP employment survey was released this morning and it reflected slowing job growth. You will recall this is the precursor to Friday’s government report on job creation, which for the month of June is expected to reflect job losses of approximately 110,000.

Mortgage prices are approximately .125% to .25% worse than Tuesday.

Market Commentary

The relentless bond rally continues this morning as U.S. and global stock markets sink as the Conference Board, an economic and industry group, reported its index of consumer confidence fell to 52.9 in June from a reading of 62.7 in May. In addition to slipping consumer confidence, the Conference Board also reported that growth in China is slowing. The combination of these two reports layered on top of continued concerns regarding the sovereign debt of many European countries has investors fleeing to the perceived safety of U.S. treasuries. The yield on the 10 year note fell below 3% this morning, and traded as low as 2.95%. As of this writing the 10 year note yield stands at 2.99%, while U.S. stock markets are selling off.

Mortgage prices have improved between .125% and .25% from the close on Monday.

Market commentary

Bond prices rose on Friday and are moving higher this morning after the markets had a chance to review the financial regulatory bill moving through Congress and the comments from the G20 meeting in Toronto.

The consensus regarding the financial regulatory bill is that it will create two new government agencies and impose new fees and taxes to pay for these agencies. While the fees and taxes are on banks, hedge funds and other financial businesses, we all know these will be passed along to the end user, i.e., the consumer---you and me. In addition, as with any government regulation, economic growth will be stymied at a time when the U.S. economy can least afford it.

Over the weekend the Group of 20 largest industrialized nations met in Toronto to discuss global economic growth and the ballooning government deficits. The U.S. called for more stimulus while the European Union suggested austerity, so the end result, as is reflected in the bond and stock markets today, is that global growth will be limited. Slow economic growth supports the bond market.

Market commentary

U.S. Senate, House and White House conferees reached agreement on final amendments to what is called the “Wall Street” reform bill. Unfortunately this bill does little to reform Wall Street, but it will put a further tightening on credit availability while imposing fees to pay for the additional government agencies it establishes. The imposition of fees and taxes on banks to pay for the new bureaucrats, as we all know, will be paid by the consumer in the end. At a time when the economy can least afford it credit will become harder to obtain.

If there is good news to be derived from this, it is the market “vote”. And the vote today is a decline in stocks and an improvement in bond prices. Investors feel this legislation will place a further drag on the U.S. economy and therefore reduce corporate profit growth---meaning lower stock valuations. For those of us in mortgage land, the good news is interest rates will remain at low levels as long as investors feel economic growth will be hindered.

Market commentary

Bonds received a boost on Wednesday from the FOMC (Fed) announcement which downgraded slightly its assessment of the U.S. economy. As expected, the Fed will not be raising interest rates anytime soon.

The 5 year note auction was a horrible affair, one of the weaker sales reported in many months. Keep in mind today the U.S. Treasury will sell $30 billion of 7 year notes, so keep a watchful eye on the markets.

The bond market opened strong this morning, but has since faded to unchanged on the day, while stocks are lower. Take advantage of the rates sooner rather than later.

Market commentary

Bad news on the housing front has bond prices improving again today. This morning the Commerce Department reported new home sales fell to the lowest level since record keeping began back in 1963. Clearly the expiration of the home buyer tax credit has had a negative affect on purchases, in addition to the continued weakness in the labor market.

This news comes on the second day of the Fed policy meeting, so the markets will be waiting to hear how the Fed addresses the extremely weak housing market as well as the floundering economic recovery.

Prior to the Fed announcement the U.S. Treasury will auction $38 billion of 5 year notes. You will recall Tuesday’s 2 year note auction saw aggressive demand---this morning the yield on the 2 year note stands at .695%.

Market commentary

Existing home sales in May, which were expected to show and increase actually fell 2.2%, according to the National Association of Realtors. The Federal tax credit which expired April 30, was expected to provide a boost to home sales, and we still may see that in the June data, as purchases must be complete by June 30 to qualify for the tax credit.

Monday’s rally in the stock market faded as the day wore on, and stocks opened flat this morning. Bond prices continue to improve with mortgage bonds better by .125% to .25% in price.

The U.S. Treasury will auction $40 billion of 2 year notes today, and the Federal Reserve begins its two day policy meeting.

Market commentary

With no economic data today the equity and bond markets are being driven by China’s decision to let its currency “float”. The immediate reaction was a rise in value of the Yuan, China’s currency, and a rally in global stock markets. A rise in the value of the Yuan makes goods cheaper inside of China, so in theory, domestic demand will increase. The flip side, however, is that a more valuable Yuan makes exports more expensive, so Chinese goods exported to the U.S. and Europe become more expensive. While this may help U.S. and European manufacturers become more competitive, at the end of the day it makes goods more expensive for U.S. and European consumers.

The rally in the equity markets, as one would expect, has lessened demand for U.S. Treasuries, so we see a decline in bond prices this morning. Mortgage bonds are approximately .25% worse in price from the market close on Friday.

Remember, the U.S. Treasury will auction $40 billion of 2 year notes on Tuesday, $38 billion of 5 year notes on Wednesday and $30 billion of 7 year notes Thursday. In addition to this supply, the Federal Reserve will be meeting to discuss interest rate policy in a two day meeting, which begins Tuesday and will end Wednesday with the Fed announcement regarding interest rates and prognostication for the economy.

Market commentary

No economic data today and both the equity and bond markets are trading relatively flat versus the close on Thursday. The bond market specifically will be focused on next week’s U.S. debt auctions and the Fed meeting.

The U.S. Treasury will auction $40 billion of 2 year notes on Tuesday, $38 billion of 5 year notes on Wednesday and $30 billion of 7 year notes Thursday. In addition to this supply, the Federal Reserve will be meeting to discuss interest rate policy in a two day meeting, which begins Tuesday and will end Wednesday with the Fed announcement regarding interest rates and prognostication for the economy.

Have a great Father’s Day weekend!

Market commentary

More positive news on inflation this morning as the Consumer Price Index for May falling 0.2%, while excluding food and energy CPI rose 0.1%. Additional economic data came from the Federal Reserve Bank of Philadelphia which reported its economic index for its region fell to 8, from a reading of 21.4 the previous month. While a positive number reflects expansion, the drop in the index reflects the expansion is slowing significantly.

Bond prices rose sharply on the tame inflation and weak economic data, with mortgage bonds improving .25% to .375% in price.

Market commentary

Positive news for bonds this morning as inflation remains a non-event based on the Producer Price Index for May falling 0.3%, while excluding food and energy PPI rose 0.2%. Additional positive news for bonds was a report from the Commerce Department that Housing Starts fell 10% and building permits declined to a one year low. This data reflects an overhang of excess housing, including foreclosures and “shadow” inventory, and the expiration of the homebuyer tax credit.

U.S. stock markets are lower on the day given the downbeat economic data on housing while treasury and mortgage bond prices are improved. Mortgage bonds are approximately .125% better from Tuesday’s close. Remember, bonds sold off Tuesday afternoon, so the improvement is from those levels.

Market commentary

European and U.S. stock markets moved higher this morning on successful debt sales by Ireland, Spain and Belgium. Although investors required higher than “normal” yields to absorb the bonds, the markets viewed the auctions as successful.

U.S. Treasuries are flat from Monday’s close while mortgage bonds are improved by approximately .125%.

Market commentary

What a difference a weekend makes. After a strong rally on Friday, bonds are giving back everything as global stock markets rebound, based on European industrial data. This data was stronger than expected; easing concerns the sovereign debt crisis in Europe would lead a global economic slowdown.

The economic calendar this week is full including the Producer Price Index, Housing Starts, Industrial Production, and the Consumer Price Index.

Market commentary

The U.S. stock market posted strong gains on Thursday, while the bond market was hit with heavy selling. Mortgages lost over .625% in price during the day, forcing lenders to post mid-day price changes for the worse.

This morning Thomson Reuters/University of Michigan reported its consumer confidence survey had risen to 75.5, the highest reading since January 2008, however, this optimism was not present in the Retail Sales data, when the Commerce Department reported retail sales fell 1.2% in May.

U.S. stock markets are trading slightly lower on this data, while treasury and mortgage bonds are gaining back some of Thursday’s losses.

Enjoy your weekend!

Market commentary

Global stock markets, inclusive of the U.S. are rallying this morning on economic reports from China, Australia, and Japan reflected accelerating growth. The sole negative report came from the U.S. as weekly jobless claims remain higher than expected; indicating the job creation in the U.S. is anemic.

The markets have discounted the jobless claims data as investor clamor into stocks, which has driven the DOW higher by 200+ points. As one should expect, bond prices are declining moving interest rates higher. The yield on the 10 year note now stands at 3.26%, with the $13 billion of 30 year treasury bonds still to come.

Mortgage pricing is .15% to .375% worse from the close on Wednesday, but remain in the mid 4% range.

Market commentary

Tuesday I mentioned today’s $21 billion auction of 10 year notes is likely to find some headwinds given the 10 year note was yielding 3.18%, and the market had not seen a 10 year auction below the 3.20% yield since November 2009. Well, this morning bond prices are sagging and the yield on the 10 year note has risen to 3.23%, so hopefully this new supply will be absorbed without an increase in rates.

Stocks posted gains on Tuesday and are trading in positive territory again today. Fed Chairman Bernanke commented he expects to see the U.S. economy avoid a double-dip recession, and expects the Euro to survive as a currency. I am sure you all feel much better now.

Mortgage bonds are trading .125% to .25% worse in price from the close on Tuesday; however, mortgage interest rates remain at extremely low levels---sub 4.50%!

Market commentary

Gold surged to a new high this morning, topping $1,250/oz. as concerns regarding the European economies lingers, and the Euro its price decline. Monday, U.S. stocks continued their decline giving bond prices another reason to improve---this scenario has reversed slightly this morning.

Bond prices are trailing off slowly in front of the U.S. auction of $38 billion of 3 year notes, as well as anticipating Wednesday’s 10 year note auction. This auction is likely to find some headwinds as the 10 year note currently yields 3.18%, and the market has not seen a 10 year auction below the 3.20% yield since November 2009.

For today, take advantage of the market---low interest rates and attractive home prices make this a great buying season!

Market commentary

The markets remain focused on Friday’s employment data, with much discussion about the possibility of slowing economic growth. The question that will not be answered until next month, is was this a one off event, or is job growth slowing again?

The economic calendar is light this week, so the focus will be the U.S. Treasury auctions of 3 year notes, 10 year notes, and 30 year bonds, which will be held beginning tomorrow.

This morning’s WSJ has an extensive article on Fed policy, discussing the pressures which will keep the Fed on hold. It quotes several Fed officials who express concern about a “tail event” and who note that the economic facts do not justify shifting to a tighter policy stance.

Mortgage pricing is great again today, and even better with the HSOA purchase money and fico incentives!

Market commentary

Wow, the jobs report this morning surprised the markets---bad news for stocks and great news for bonds. Non-farm payrolls rose by 431,000, a decent number, however, when looking behind the curtain private sector employment rose by only 41,000 compared to an increase of 218,000 in April. Economists had estimated private sector jobs would grow by 191,000. The balance of the job growth was temporary hiring for the U.S. Census.

The result in the markets is a steep sell off in stocks, with the DOW currently lower by 200+ points and a rally in treasuries and mortgages. Mortgage pricing is .50% to .625% better than the market close on Thursday.

Market commentary

The U.S. stock market had quite the bull run on Wednesday, resulting in a steep decline in bond prices. This morning mixed economic data has the stock market trading flat; however, bond prices are again lower.

The ADP private jobs report was expected to show employers added 100,000 new jobs in May; however, the actual data was half that number at 55,000. Positive economic data came from the Institute for Supply Management as this group reported the non-manufacturing sector of the economy expended for a fifth straight month. In addition, new orders at U.S. factories rose 1.2%, after declining the previous month.

Keep in mind tomorrow the Labor Department will release the jobs data for May, which is expected to show 500,000+ new jobs were added to the U.S. economy. Yes, this is a large number, which includes a significant amount of temporary workers hired by the Census Bureau.

Market commentary

Coming as no surprise to anyone, sales of previously owned homes rose 6% in April, as folks took advantage of the last month of a tax credit offered to home buyers. US stocks are higher on this news and the lack of depressing news from Europe. As for bonds, treasuries are slightly lower from the market close on Tuesday, and mortgage pricing is flat from Tuesday.

Bonds may begin to trade heavy in front of Friday’s payroll data, as prognosticators project in excess of 500,000 US jobs were created in May. Thursday morning we will get a glimpse of the jobs data when ADP, the large payroll processing company, releases their private employment survey.

Market commentary

The Bank of Canada raised its key interest rate from a record low 0.25% to 0.50%, the first Group of Seven country to do so since last year’s global recession, and said further moves will be “weighed carefully” against future growth in Canada and elsewhere. In the U.S., the Institute for supply Management released its May index, which fell slightly to 59.7 from 60.4 in April. Keep in mind, an index reading above 50 indicates expansion in the manufacturing sector, and this is the 10th month this index has been above 50.
This week is full of important economic data culminating with the U.S. jobs report on Friday. Job growth is estimated to be 500,000 in April, with private employers contributing 170,000.
Again this week, Europe and its sovereign debt issues will be front and center, and it is clear this is now a long term problem. Expect volatility in stock and bond markets to continue as we get the push-pull of positive economic data from the US and the specter of sovereign debt defaults in Europe.