Initial jobless claims for the week ending June 4 remained above 400,000 at 427,000, slightly higher than the previous week’s 426,000. This data coincides with information released in the Fed’s Beige book Wednesday afternoon, with mixed data from the 12 districts. The report stated “economic activity generally continued to expand, although a few districts indicated some deceleration”.
The Euro zone continues to fret over the potential of a bond default by Greece, and the European Central Bank this morning decided to leave its benchmark rate unchanged. The ECB signaled it may raise rates at the next meeting.
U.S. Treasuries and mortgages are flat from Wednesday’s close, with the yield on the 10 year note hovering in the 2.96% to 2.97% range, and U.S. stocks markets are higher after 6 days of losses.
Thursday, June 9, 2011
Wednesday, June 8, 2011
Market commentary
Bond prices have moved higher; yields lower with no substantive economic data today. However, there are a few issues demanding the attention of the markets. OPEC could not agree on a deal to increase output so oil prices once again rose above $100/bbl; just when I was able to pay less than $4.00 for a gallon of gas.
In Europe, it appears Greece will technically default, or as the euphemism being used states, a selective default. Investors would be forced to swap existing debt for new bonds with extended terms.
If one thinks defaults on bond obligations are limited to “poorer” countries we may be in for a surprise. U.S. Republican lawmakers are considering allowing a brief default as a means to force deeper spending cuts as a condition to raising the U.S. debt ceiling. An adviser from China’s central bank commented this idea is “playing with fire”.
Later today the Fed will release its Beige Book survey of economic activity and the U.S. Treasury will auction $21 billion 10 year notes.
Kudos to JP Morgan CEO Jamie Dimon for his comments during the Q&A session after Fed Chairman Bernanke’s speech at the International Monetary Conference. As if speaking for all of us in the finance, banking and mortgage industry, Mr. Dimon began by reading a laundry list of changes that have already occurred, many of them dictated by the markets rather than by new laws or regulations. He then said, “Now we’re told there are going to be even higher capital requirements, and we know there are 300 rules coming, has anyone bothered to study the cumulative effect of these things and do you have a fear like I do that when we look back and look at them all, that they will be the reason that it took so long for our banks, our credit, our businesses, and most importantly, our job creation, start going again? Is this holding us back at this point?"
In Europe, it appears Greece will technically default, or as the euphemism being used states, a selective default. Investors would be forced to swap existing debt for new bonds with extended terms.
If one thinks defaults on bond obligations are limited to “poorer” countries we may be in for a surprise. U.S. Republican lawmakers are considering allowing a brief default as a means to force deeper spending cuts as a condition to raising the U.S. debt ceiling. An adviser from China’s central bank commented this idea is “playing with fire”.
Later today the Fed will release its Beige Book survey of economic activity and the U.S. Treasury will auction $21 billion 10 year notes.
Kudos to JP Morgan CEO Jamie Dimon for his comments during the Q&A session after Fed Chairman Bernanke’s speech at the International Monetary Conference. As if speaking for all of us in the finance, banking and mortgage industry, Mr. Dimon began by reading a laundry list of changes that have already occurred, many of them dictated by the markets rather than by new laws or regulations. He then said, “Now we’re told there are going to be even higher capital requirements, and we know there are 300 rules coming, has anyone bothered to study the cumulative effect of these things and do you have a fear like I do that when we look back and look at them all, that they will be the reason that it took so long for our banks, our credit, our businesses, and most importantly, our job creation, start going again? Is this holding us back at this point?"
Tuesday, June 7, 2011
Market commentary
Economic data today is sparse with markets focused on the potential resolution of the Greek debt crisis, a speech by Fed Chairman Bernanke that will be delivered at the International Monetary Conference in Atlanta, and the U.S. Treasury's auction of $32 billion 3 year notes.
Having nothing concrete on which to focus, the stock and bond markets are range bound with limited volatility. The yield on the 10 year note has risen slightly to 3.04% and prices on mortgages are worse by approximately .125%.
Having nothing concrete on which to focus, the stock and bond markets are range bound with limited volatility. The yield on the 10 year note has risen slightly to 3.04% and prices on mortgages are worse by approximately .125%.
Monday, June 6, 2011
Market commentary
This week's economic calendar is light with no data releases scheduled for today. Probably the two most important items this week are the Fed's Beige Book on Wednesday and initial jobless claims on Thursday.
For today stocks are trending lower as carry over from Friday's weak jobs data, and bonds yields have risen slightly. Mortgage prices are worse by approximately .125%.
For today stocks are trending lower as carry over from Friday's weak jobs data, and bonds yields have risen slightly. Mortgage prices are worse by approximately .125%.
Friday, June 3, 2011
Market commentary
The jobs data surprised even the most bearish economists with payrolls increasing by a nominal 54,000 in May while the jobless rate rose to 9.1%. The median forecast in a Bloomberg News survey called for payrolls to rise 165,000. Private hiring rose 83,000 while government payrolls shrank by 29,000; mostly state and local government jobs.
The market’s initial reaction was a steep decline in stocks and a rally in bonds, with the yield on the 10 year note falling to 2.95%.
The markets reversed course on the ISM non-manufacturing data, which reflected an 18th straight month of growth in U.S. service sector. Bonds gave back all of their gains after this data, with the yield on the 10 year note climbing above 3% to 3.02%, the level at which it closed Thursday. Mortgage pricing will be slightly better, approximately .10% to .20%.
The market’s initial reaction was a steep decline in stocks and a rally in bonds, with the yield on the 10 year note falling to 2.95%.
The markets reversed course on the ISM non-manufacturing data, which reflected an 18th straight month of growth in U.S. service sector. Bonds gave back all of their gains after this data, with the yield on the 10 year note climbing above 3% to 3.02%, the level at which it closed Thursday. Mortgage pricing will be slightly better, approximately .10% to .20%.
Thursday, June 2, 2011
Market commentary
Bonds were clear winners yesterday, putting in a strong rally on the weaker than expected economic reports. Assisting the bond rally was the steep decline in stocks, which shave 280 points off the DOW. The yield on the 10 year note broke through 3%, closing at 2.96%.
422,000 new jobless claims were filed last week, a number higher than estimates, and marking the eighth consecutive week claims have remained above the pivotal 400,000 mark. With Wedenday's weak ADP jobs report and continued high weekly jobless claims the estimates for Friday's payroll data have become increasinly uncertain. Some economists remain with previous forcasat of +175,000 while others have lowered their estimates to +105,000. This is clearly a broad range leaving much uncertainty about the data and how the markets will react.
This morning bonds are giving back some of Wednesday's gains, with the yield on the 10 year note rising to 2.99%. Mortgage pricing is worse by .10% to .20%.
422,000 new jobless claims were filed last week, a number higher than estimates, and marking the eighth consecutive week claims have remained above the pivotal 400,000 mark. With Wedenday's weak ADP jobs report and continued high weekly jobless claims the estimates for Friday's payroll data have become increasinly uncertain. Some economists remain with previous forcasat of +175,000 while others have lowered their estimates to +105,000. This is clearly a broad range leaving much uncertainty about the data and how the markets will react.
This morning bonds are giving back some of Wednesday's gains, with the yield on the 10 year note rising to 2.99%. Mortgage pricing is worse by .10% to .20%.
Wednesday, June 1, 2011
Market commentary
Weak economic data this morning are crushing stocks and creating a nice rally in bonds. The yield on U.S. Treasuries is lower across the curve, with the 10 year note falling to 2.975%! Mortgage prices have improved by .375% to .50% from the close on Tuesday.
ADP surprised the markets by reporting only 38,000 new jobs were created in May, well below the expectation of 175,000. The ADP report does not always track the Labor Department's data, which we will see Friday morning, however, it is an ominous sign given the weak data reports of the past few weeks.
In addition to ADP the Institute for Supply Management's business activity index for May came in at 53.5 versus the April reading of 60.4. While a number above 50 indicates continuing expansion in the manufacturing sector, momentum has definitely slowed.
The decrease in interest rates in giving home buyers and existing home owners another great opportunity to lock in a 30 year fixed rate at 4.5% or lower. Now is the time to take advantage of low interes rates in conjunction with the new, expanded guideline, product offerings from Home Savings! Contact your HSOA Community Banker for all of the details!
ADP surprised the markets by reporting only 38,000 new jobs were created in May, well below the expectation of 175,000. The ADP report does not always track the Labor Department's data, which we will see Friday morning, however, it is an ominous sign given the weak data reports of the past few weeks.
In addition to ADP the Institute for Supply Management's business activity index for May came in at 53.5 versus the April reading of 60.4. While a number above 50 indicates continuing expansion in the manufacturing sector, momentum has definitely slowed.
The decrease in interest rates in giving home buyers and existing home owners another great opportunity to lock in a 30 year fixed rate at 4.5% or lower. Now is the time to take advantage of low interes rates in conjunction with the new, expanded guideline, product offerings from Home Savings! Contact your HSOA Community Banker for all of the details!
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