Bonds gave ground Monday with the 10 year yield rising from 2.88% to 2.92%. This morning the 10 year is up to 2.95%, and stocks are rebounding on strong earnings from IBM and Coca Cola. Earnings in the financial space are not so great, as Goldman Sachs missed projections and Bank of America reported a loss of $9.1 billion as B of A continues to set aside reserves for loan losses and settlements.
Housing starts for the month of June, released this morning, rose from 549,000 to 629,000 driven mostly by starts from multi-family construction which is up 30.4% month over month.
Monday, spreads on mortgages widened substantially to U.S. Treasuries, causing many lenders to worsen prices mid-day. This morning mortgage prices are lower again by .125% to .25%, bringing the two day loss to just over .50%. Traders I spoke with point to the stalled talks on the debt ceiling and the rating agencies potential downgrade of the U.S. as reasons for the price declines.
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