Market commentary

Weaker than expected growth in the U.S. economy as highlighted in today’s Gross Domestic Product report has created strong reactions in the U.S. stock and bond markets. Both markets are focusing on the consumption piece of the report, which shows consumer spending slowed dramatically. Stock prices are falling while we see a significant rally in treasuries and mortgage bonds.

Two post GDP reports, the Chicago Purchasing Managers Index and University of Michigan Consumer Confidence reflected strength in certain areas of manufacturing, although these reports were not enough to overcome the effect of the GDP report.

Market commentary

Wednesday’s 5 year note auction was well received and the Fed released its Beige Book which suggested weak economic growth in most areas of the U.S. These items allowed treasury and mortgage bond prices to firm late in the day.

This morning a decline in weekly jobless claims helped buoy the stock markets and pushed the yield on the 10 year note back to 3.04%. The only remaining item on today’s calendar is the Treasury’s $29 billion auction of 7 year notes.

Market commentary

New orders for U.S. manufactured goods such as cars, planes, and appliances, which are referred to in economic reports as Durable Goods; fell for a second straight month in June. This data coupled with other reports reflecting falling consumer confidence and anemic job suggest the economic growth is indeed slowing.

The market reactions have been fairly muted with U.S. stocks trading slightly lower, and bond prices lower as well. With falling bond prices we have seen interest rates move higher, with the yield on the 10 year note currently trading at 3.05%.

Tuesday’s $38 billion auction of 2 year notes was well received and investors are awaiting the results of today’s auction of $37 billion of 5 year notes.

Market commentary

Mixed economic data this morning with relatively good news for home prices as the S & P/Case-Shiller index of property values reflected a 4.6% year over year increase. This news was overshadowed by the Conference Board’s consumer confidence index which fell to 50.4, a five month low. Stocks turned lower after the consumer confidence data, and bonds are lower as well, nervously awaiting today’s auction of $38 billion in two year notes.

Market commentary

Bond prices declined on Friday on improved economic outlook and relief that only 7 of 91 European Banks failed their stress tests. While there is some concern the “stress” test was too lenient, the news was enough to move stock prices higher and bond prices lower.

This morning the Commerce Department announced new home sales for June rose 23.6%, although this was still the second slowest sales month since records keeping began in 1963. This data had little effect on the markets which are still trading from Friday’s news.

Bond prices are again falling with the yield on the 10 year note once again above 3%, trading at 3.03%, as the bond market prepares for this week’s Treasury auction of $104 billion; $38 billion of 2 year notes, $37 billion of 5 year notes and $29 billion of 7 year notes.

Market commentary

Bonds rallied sharply in the wake of Bernanke’s uncertain economic outlook on Wednesday, however, bond prices fell Thursday and are lower this morning as more positive corporate earnings reports have served to lift spirits and stock prices. Ford beat estimates nicely and is forecasting a continued steady rise in aggregate sales and profits. Verizon and McDonalds also beat. After digesting the morning’s earnings releases, the focus will be on the noon eastern release of the European stress tests of financial institutions. While subject to questions of transparency and severity, the stress tests are poised to answer some questions and remove some uncertainty from the Euro region. With US markets still open when released, the stress tests are poised to be market-moving.

Market commentary

Caterpillar, 3M, and UPS were among companies reporting strong second quarter earnings this morning, and the National Assn. of Realtors reported existing home sales fell only 5.3% in June. Many analysts had forecast a much steeper decline in home sales, so with the smaller than expected decline in housing and the strong earnings reports, U.S. stocks are rallying. Treasuries are giving back most of Wednesday afternoon’s gains, as are mortgage bonds.

Market commentary

Bond prices are improving slightly again today as stocks trade close to unchanged. Wells Fargo and Morgan Stanley both beat profit estimates and Wells indicated credit performance was improving. We have another day of bonds trading in a range with prices slightly improved.

Market commentary

Citi, Bank of America, and GE all beat earnings estimates, however, earnings are growing on cost cutting, not on demand for goods and services. Revenue expectations reflect this trend, and the result is a significant decline in U.S. stock prices.

Additional economic data shows inflation is not a threat as the Consumer Price Index fell 0.1% with the core rate rising 0.2%. Bond prices are in rally mode again, causing the yield on the 10 year note to fall to 2.935%.

Thursday afternoon the Senate passed the new financial regulatory bill, which will add over 5000 pages of new regulations to large banks, community banks, non-bank mortgage lenders and many other types of businesses that offer credit. In addition to the new regulations, the bill authorizes a new government agency that will cost billions to operate. We all know where that money will come from; yes, you and I. Between the massive health care reform and now the financial regulatory reform, the markets are sending a clear signal that the only growth in the U.S. will be in government and the U.S. economy and employment will be stagnant for years to come. One only has to look at the bond market and the extremely low yields to obtain confirmation.

Market commentary

Bond prices rose sharply on Wednesday as the FOMC’s June minutes showed more clearly the Fed’s downgraded economic view, as the Fed increasingly sees the economy as being years away from its long-term potential. The result of the minutes is a further extension of the “extended period” of low interest rates.

This morning U.S. stock markets are falling on reports that industrial production and manufacturing are slowing, causing bond prices to again improve with the yield on the 10 year note falling below 3%, to 2.99%.

Market commentary

Bond prices declined Tuesday after a poorly bid 10 year note auction. This morning, however, we see a reversal, with bond prices moving higher even as stocks perform well. Retail sales were reported mixed, but is was a strong earnings report from Intel that is driving equities higher today.

The markets still need to absorb today’s 30 year bond auction and the release of the minutes from the last Fed meeting.

Market commentary

Strong earnings reports form Alcoa and CSX are moving the U.S. stock markets sharply higher this morning. As one would expect with investors piling into stocks bond prices are falling with the yield on the 10 year note rising to 3.10%. Mortgage prices are approximately .25% worse than Monday.

Later today the U.S. Treasury will auction $21 billion of 10 year notes this afternoon, and Intel is among the companies reporting earnings after the stock market close.

Market commentary

Bond prices are slightly improved this morning as the economic calendar gets very busy this week. Three must-watch releases are the minutes of the June FOMC meeting, industrial production/capacity utilization, and the University of Michigan consumer confidence index. The June FOMC minutes are not likely to produce any insight that hasn’t already been discerned from the announcement and from comments by Fed officials since then. The minutes should reinforce expectations that the Fed will remain on-hold for quite some time focusing on economic growth, as inflation remains quite low, which is expected to show in the Consumer Price Index.

This week also features $68 billion of Treasuries including an estimated $34 billion of three-year notes, $21 billion of ten-year notes, and $13 billion of thirty-year bonds. Second quarter earnings season will also begin so, while last week was a fairly uneventful one for the markets and the outlook, the coming week should prove more interesting, reinforcing or refuting the double-dip concerns.

Market commentary

Bond prices fell Thursday causing the yield on the 10 year note to rise above 3% for the first time in many days, closing at 3.03%. Yields are slightly higher this again this morning, now trading at 3.055%. Mortgage prices fell Thursday as well, causing most lenders to re-price for the worse, and mortgage pricing is slightly worse again this morning.

In contrast to this week, next week will feature a busy calendar of economic releases, Treasury auctions and the beginning of earnings season. Keep in mind the bond market has priced in an Armageddon type economic collapse, so any positive news, including positive earnings announcements from corporate America could cause interest rates to move higher.

Market commentary

Given the lack of economic data and growing positive sentiment that 2nd quarter earnings were strong, gave the impetus for Wednesday’s stock market rally, and subsequent sell off in bonds. This scenario is playing out again this morning as U.S. stock markets are moving higher and bond prices lower. The yield on the 10 year note rose above 3%, currently trading at 3.035%.

Next week’s treasury auctions are putting additional pressure on the bond market with estimates of $34 billion of 3 year notes, $21 billion of 10 year notes, and $13 billion of 30 year bonds.

Interest rates on mortgages remain at 4.50% and below, so there is still opportunity for your home buyers and borrowers seeking to refinance to a lower rate.

Market commentary

U.S. stock markets began Tuesday morning with a surge that faded late in the day, resulting in a surge in bond prices. Mortgage bonds rallied along with treasuries as investors continue to seek risk adverse returns, even though those returns are sub 1.00%.

Today stocks are higher at the open with bonds flat from Tuesday’s close, but as we have seen in recent weeks the markets can be quite fickle. Mortgage prices are flat from Tuesday’s close, keeping in mind HSOA improved pricing mid-day.

Market commentary

Weak economic releases dominated last week’s news, supporting bond prices and low yields, and also driving down stock prices. With little data scheduled for release this holiday shortened week, stocks and bonds will trade on news related items, while keeping in mind the U.S. Treasury will auction 3 year and 10 year notes, and 30 year bonds the following week.

U.S. stock markets are rebounding this morning as are bonds. Mortgage pricing is .125% to .25% better than Friday.

Market commentary

Non-farm payrolls fell 125,000 as U.S. census workers were let go, however, the private sector hired 83,000 new workers reflecting the U.S. economy is treading water at best. Interestingly the unemployment rate fell to 9.50% as folks left the workforce.

The U.S. stock and bond market reactions have been muted, with both markets down slightly. The yield on the 10 year note rose slightly to 2.98%, while mortgage prices are approximately .125% than Thursday. The bond market has a full trading session today, and the HSOA lock desk will be open normal hours---until 4:00 PM, PT.

Have a safe and happy Independence Day celebration!

Market Commentary

Believe it or not, bond prices are moving higher again today, mostly at the long end with the yield on the 10 year note holding at 2.90%. Stock markets are falling again based on continued weak economic data, including and increase in weekly jobless claims and a decline in manufacturing.

Other weak data driving investors into U.S. Treasuries came from Europe and China as they reported declining economic activity based on a decline manufacturing activity, and Spain was put on credit watch.

Mortgage prices are flat this morning from the close on Tuesday, but remember, trading will be very light as we head into the Independence Day Holiday weekend, so we could see some volatility.

HSOA would like to thank all of our partners and associates for making June a terrific month! Loan volume continues to be high, so please do not delay in submitting your loan files and conditions to ensure timely July closings.