Market commentary

This week’s economic calendar is full including inflation data in the form of the Producer and Consumer Price Indices, Retail Sales, the Fed’s Beige Book, and consumer confidence. If the data were not enough the U.S. Treasury is scheduled to auction $32 billion in 3 year notes, $21 billion in 10 year notes, and $13 billion in 30 bonds. The week also begins where last week left off, with the sovereign debt crisis in Europe, conflicts in the Middle East, the continued saga in Japan and oil prices north of $111 per barrel. Mortgage prices are slightly improved from Friday and the yield on the 10 year note is trading at 3.59%.

Market commentary

This morning, bond prices are a bit lower, pushing the yield on the 10 year note to 3.59%, its highest yield since February. Regarding the economy, there are two major stories today – oil and the budget showdown. Oil jumped to over $110 per barrel on Thursday and is nearing $112 per barrel this morning, which places oil at its highest level since September 2008 and 32% above its one-year average. In Washington, the budget stalemate continues with multiple trips to the White House by Congressional leaders seeming to narrow gaps but not bridge it. This morning it remains unclear whether a deal will be reached between House Republicans, Senate Democrats, and the White House. Lenders are busy researching and publishing information on how a government shut down will affect certain aspects of the mortgage business. The processing of 4506-Ts, the ability to insure FHA loans, and obtaining new commitments for USDA Rural housing are among the services that will be impacted. According to Politico, past government shutdowns (there have been 18 since 1977) have produced more news and drama than actual market and economic impact.

Marekt commentary

The weekly jobless claim figures continue to give positive indications about the labor market, with initial claims for last week falling 10,000 to 382,000. The four week moving average, which reduces the weekly volatility, also fell to a reading of 389,000. News from Europe is not as positive as Portugal caves and asks the ECB for a bailout, and in an effort to fight inflation the European Central Bank raised its key lending rate by .25% to 1.25%. Back in the U.S. oil remains above $108 per barrel and our elected leaders struggle to reach a budget accord. Interest rates continued their ascent on Wednesday with the yield on the 10 year note rising to 3.55%. Bonds have opened flat this morning, however, after Wednesday’s declines mortgage prices are worse by approximately .25%.

Market cmmentary

Mortgage applications fell 2.0% for the week ending April 1, however, on a positive note, the Mortgage Bankers Assn. reported purchase applications rose 6.7% while applications for refinance fell. There are no more economic releases scheduled for today. Interest rates are on the rise again with the yield on the 10 year note reaching 3.51% this morning. Mortgage bonds continue to falter and are approximately .375% to .50% worse in price from Tuesday morning. Gold reached an all-time high this morning at $1,459 per ounce and oil remains above $108 per barrel. Economists are beginning to take note that fuel prices are taking a bite out of consumer spending; spending on things other than gasoline that is. A number of economic forecasts for the second half of 2011 are being lowered, putting the Fed between in a difficult position.

Market commentary

The ISM non-manufacturing index for the month of March fell from 59.7 to 57.3, below expectations. While the non-manufacturing report is not as strong as the manufacturing report, it remains a positive indicator for economic growth despite falling a bit from February. The current level of activity is consistent with GDP growth in the 3.5% range. The Bank of China raised interest rates for the fourth time since the global financial crisis ended, raising their one-year lending rate from 6.06% to 6.31% and the one-year deposit rate from 3.00% to 3.25%. The move comes before the monthly release of inflation in China, which grew last month at 5.2%. While we are discussing inflation, according to a Bloomberg article, “Federal Reserve Chairman Bernanke said he expects an increase in commodity prices to create a `transitory` boost in U.S. inflation”. I guess that is Fed speak for don’t worry about higher energy and food prices for now because they will eventually go away. In the interim, that does not bode well for the average American, of which I am one. Market reactions to this data and news are mixed. U.S. stocks are in positive territory while bonds are worsening. The yield on the 10 year note has risen to 3.48%, up from 3.42% at the close on Monday.

Market commentary

This week has a decidedly slower economic calendar with the most significant releases will being the ISM non-manufacturing report (Tuesday), and wholesale inventories (Friday). Analysts expect the ISM data will show a leveling off in the services sector with a slight increase in the index from 59.7 to 59.9. Tuesday the Fed will release the minutes from its March 15th FOMC meeting. The minutes will be scoured to find any hints of dissention on continuing QE2 to its scheduled conclusion in June. There numerous Fed speakers last week and several of them have indicated a willingness to at least give serious debate to cutting the pro-gram off $100 billion short. However, Fed Chairman Bernanke and several key FOMC members are still fully on board, so it appears unlikely they will stop the QE2 purchases early. This morning we see positive moves in both stocks and bonds, with mortgages approximately .25% better from the close on Friday.

Market commentary

Nonfarm payrolls grew by 216k in March, slightly exceeding expectations. The growth included 230,000 private payrolls and a loss of 14,000 government jobs. The biggest gains came in service-related jobs which grew 199,000 on the month. Manufacturing added 17,000 jobs, marking the fifth straight month of manufacturing job gains. In reaction to the data bonds sold off slightly with the 10-year trading from 3.49% to 3.52% immediately following the release. The stock markets liked this data and are moving higher. In a no “April Fools” joke, there has been a temporary stay in the new loan officer compensation rules until a hearing on April 5, 2011. As a result Home Savings of America will continue to operate under the pre-April 1 rules until further notice.