Stocks were up 330 points yesterday on hopes that French President Sarkozy and German Chancellor Merkel are finally getting serious about resolving the euro zone financial crisis. The two leaders vowed to offer a joint plan within the next few weeks to bolster European banks, and to do whatever it takes. They did not address how they will deal with Greece which is a separate, but connected, issue.
Watching CNBC this morning the question was asked, “How does Slovakia affect the global financial system”? The answer is, Slovakia is the last of the 17 euro zone countries to vote on expanding the European Financial Stability Fund, and if approved, all EU members would have voted in favor of expanding the fund to help contain the financial market stress.
The positive news coming out of Europe this weekend and again this morning is leading U.S. Treasury prices lower/interest rates higher, and later today, the U.S. Treasury will auction $33 billion of 3 year notes, which could put additional pressure on bonds. The yield on the 10 year note has risen to 2.14% this morning and mortgage prices are worse by approximately .25%.
Tuesday, October 11, 2011
Monday, October 10, 2011
Market commentary
Last week seemed to be a key reversal for both bond and stock markets. After reaching historically low levels, Treasury yields moved higher every day while stocks managed to close in positive territory. The yield on the 10 year note closed Friday at 2.09%, and remember, the U.S. bond market is closed today.
U.S. stock markets are open today, and stock futures are pointing to a sharply higher market open. News this weekend that Europe will be helping their largest banks recapitalize and expectations that third quarter earnings will be positive for U.S. companies are supporting the equity markets. If the bond market was open, I expect we would see interest rates moving higher and investors leave the safety of Treasuries and move into higher risk investments.
Although the bond market is closed, HSOA will post pricing and the HSOA lock desk will be open normal hours, closing at 4:00 PM, PT.
U.S. stock markets are open today, and stock futures are pointing to a sharply higher market open. News this weekend that Europe will be helping their largest banks recapitalize and expectations that third quarter earnings will be positive for U.S. companies are supporting the equity markets. If the bond market was open, I expect we would see interest rates moving higher and investors leave the safety of Treasuries and move into higher risk investments.
Although the bond market is closed, HSOA will post pricing and the HSOA lock desk will be open normal hours, closing at 4:00 PM, PT.
Friday, October 7, 2011
Market commentary
September’s employment reports were better than expected with total payrolls increasing 103,000 while private payrolls grew 137,000. There was also a revision of +57,000 to August’s abysmal +0 payroll report. The manufacturing sector lost 13,000 jobs, its second monthly drop and the government sector lost 34,000. The largest gain came from the service sector, +119,000 which includes the return to work of the 45,000 striking Verizon workers, which helped account for the zero growth in August. The unemployment rate held steady at 9.1%.
Treasuries yields were already climbing prior to the jobs data, and quickly moved higher on the news, bringing us to a full week where the Treasury market has worsened each day. The yield on the 10 year note currently stands at 2.08%. Recall two weeks ago, after the last Fed meeting, the yield on the 10 year note fell close to 1.70%.
The bond market is closed Monday, October 10, 2011; however, HSOA will be open for business and will be accepting locks normal hours.
Treasuries yields were already climbing prior to the jobs data, and quickly moved higher on the news, bringing us to a full week where the Treasury market has worsened each day. The yield on the 10 year note currently stands at 2.08%. Recall two weeks ago, after the last Fed meeting, the yield on the 10 year note fell close to 1.70%.
The bond market is closed Monday, October 10, 2011; however, HSOA will be open for business and will be accepting locks normal hours.
Thursday, October 6, 2011
Market commentary
Treasuries sold off again on Wednesday, and are lower again today, mostly due to the absence of the flight to quality. The non-manufacturing ISM report was better than expected and there were no new reports of financial distress out of Europe. Today we see a similar pattern. Weekly jobless claims rose slightly; once again above the 400,000 market, and news from Europe tells us the EU is moving to shore up the capital of ailing banks. So now bad news equals no flight to quality bid.
The yield on the 10 year note has pushed higher to 1.955% and mortgage bonds are worse in price by approximately .25%.
We end today’s commentary with a quote from Steve Jobs 2005 Commencement Address at Stanford University – "Your time is limited, so don"t waste it living someone else"s life. Don’t be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of other's opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”
The yield on the 10 year note has pushed higher to 1.955% and mortgage bonds are worse in price by approximately .25%.
We end today’s commentary with a quote from Steve Jobs 2005 Commencement Address at Stanford University – "Your time is limited, so don"t waste it living someone else"s life. Don’t be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of other's opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”
Wednesday, October 5, 2011
Market commentary
ADP’s estimate of private sector created in September came in it at 91,000, slightly more than expected. According to ADP, small business is where job creation is occurring. Since the end of the recession, small business has added 633,000 jobs, medium firms have added 541,000, and large firms have cut 287,000. In other job related news, Challenger, Gray, and Christmas’ job cuts index rose 211% year over year for the month of September. This is the largest year over year increase in the index since the heart of the recession, and was driven by announcements from the Army and Bank of America.
The Institute for Supply Management reported its index for the non-manufacturing sectors of the U.S. economy fell to 53.0 from 53.3 in August. While this index remains in positive territory, the decline reflects the softness in economic conditions.
Fed Chairman Bernanke testified before Congress yesterday, justifying the aggressive role of the Fed by stating the “recovery is close to faltering” and that the U.S. economy is further away from full employment than price stability. His message was that the Fed was trying to spur the economy along but that fiscal policymakers (aka, the President and Congress) had to get involved also. Of course President Obama and Senator Durbin took on the challenge of job creation by attacking Bank of America for its debit card fee increase, the result of Senator Durbin’s legislation that limited the fees banks could charge to retailers for debit card transactions. Apparently the recent announcement by Bank of America that 30,000 layoffs were on the horizon, a cost cutting measure due to lower income, did not make it to Washington D.C.
For a third day in a row U.S. Treasuries are in decline. The yield on the ten year note has risen to 1.885% and mortgage bonds are worse in price by approximately .25%.
The Institute for Supply Management reported its index for the non-manufacturing sectors of the U.S. economy fell to 53.0 from 53.3 in August. While this index remains in positive territory, the decline reflects the softness in economic conditions.
Fed Chairman Bernanke testified before Congress yesterday, justifying the aggressive role of the Fed by stating the “recovery is close to faltering” and that the U.S. economy is further away from full employment than price stability. His message was that the Fed was trying to spur the economy along but that fiscal policymakers (aka, the President and Congress) had to get involved also. Of course President Obama and Senator Durbin took on the challenge of job creation by attacking Bank of America for its debit card fee increase, the result of Senator Durbin’s legislation that limited the fees banks could charge to retailers for debit card transactions. Apparently the recent announcement by Bank of America that 30,000 layoffs were on the horizon, a cost cutting measure due to lower income, did not make it to Washington D.C.
For a third day in a row U.S. Treasuries are in decline. The yield on the ten year note has risen to 1.885% and mortgage bonds are worse in price by approximately .25%.
Tuesday, October 4, 2011
Market commentary
Monday, stocks opened the 4th quarter with their worst opening day performance since 1998. Everything seemed okay until mid-morning when bond prices began to run and stocks gave in to the uncertainty coming from Europe. The euro zone finance ministers did not approve the next round of bailout money for Greece, delaying the decision on the $10.7 billion payment until sometime after October 13.
Also helping the U.S. Treasury market was the Fed, which made their first "operation twist" purchases yesterday, buying over $2 billion in longer long maturities. The 30 year bond has rallied from 3.30% before the Fed announced operation twist to 2.76% this morning, although bonds have retreated as the day wears on. Mortgages are not performing well today as they are worse in by price by just over .375%.
Also helping the U.S. Treasury market was the Fed, which made their first "operation twist" purchases yesterday, buying over $2 billion in longer long maturities. The 30 year bond has rallied from 3.30% before the Fed announced operation twist to 2.76% this morning, although bonds have retreated as the day wears on. Mortgages are not performing well today as they are worse in by price by just over .375%.
Monday, October 3, 2011
Market commentary
The first of three big economic reports this week showed that manufacturing activity grew in September. The Institute for Supply Management reported its factory index rose to 51.6 from 50.6 in August. The steady decline in this index leading up to September had many worried the U.S. was falling into a double dip recession.
The remaining two reports on which the markets will focus are the ISM non-manufacturing, which will be released Wednesday, and the jobs data, which will be released Friday. Friday’s non-farm payroll report is expected to show 56,000 new jobs were added to the U.S. economy in September with the unemployment rate remaining steady at 9.1%.
Once again, the over-riding factor in the markets today comes from Europe as Greece is projected to now fall short of its 2012 goal of cutting its deficit to 6.5% of GDP. This puts in jeopardy a planned second international bailout and a growing risk Greece will default on a portion or all of its outstanding debt.
U.S. Treasury prices are higher aging this morning after some ugly stock sessions in Asia and Europe, and mortgage prices have improved by approximately .25%.
The remaining two reports on which the markets will focus are the ISM non-manufacturing, which will be released Wednesday, and the jobs data, which will be released Friday. Friday’s non-farm payroll report is expected to show 56,000 new jobs were added to the U.S. economy in September with the unemployment rate remaining steady at 9.1%.
Once again, the over-riding factor in the markets today comes from Europe as Greece is projected to now fall short of its 2012 goal of cutting its deficit to 6.5% of GDP. This puts in jeopardy a planned second international bailout and a growing risk Greece will default on a portion or all of its outstanding debt.
U.S. Treasury prices are higher aging this morning after some ugly stock sessions in Asia and Europe, and mortgage prices have improved by approximately .25%.
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