Market commentary

Tuesday, U.S. Treasuries closed at their lowest yields since April 2009, with the yield on the benchmark 10 year note briefly touching 2.95%. This morning bond prices have backed off, however, the 10 year note yield remains below 3% at 2.99%.

The ADP employment survey was released this morning and it reflected slowing job growth. You will recall this is the precursor to Friday’s government report on job creation, which for the month of June is expected to reflect job losses of approximately 110,000.

Mortgage prices are approximately .125% to .25% worse than Tuesday.

Market Commentary

The relentless bond rally continues this morning as U.S. and global stock markets sink as the Conference Board, an economic and industry group, reported its index of consumer confidence fell to 52.9 in June from a reading of 62.7 in May. In addition to slipping consumer confidence, the Conference Board also reported that growth in China is slowing. The combination of these two reports layered on top of continued concerns regarding the sovereign debt of many European countries has investors fleeing to the perceived safety of U.S. treasuries. The yield on the 10 year note fell below 3% this morning, and traded as low as 2.95%. As of this writing the 10 year note yield stands at 2.99%, while U.S. stock markets are selling off.

Mortgage prices have improved between .125% and .25% from the close on Monday.

Market commentary

Bond prices rose on Friday and are moving higher this morning after the markets had a chance to review the financial regulatory bill moving through Congress and the comments from the G20 meeting in Toronto.

The consensus regarding the financial regulatory bill is that it will create two new government agencies and impose new fees and taxes to pay for these agencies. While the fees and taxes are on banks, hedge funds and other financial businesses, we all know these will be passed along to the end user, i.e., the consumer---you and me. In addition, as with any government regulation, economic growth will be stymied at a time when the U.S. economy can least afford it.

Over the weekend the Group of 20 largest industrialized nations met in Toronto to discuss global economic growth and the ballooning government deficits. The U.S. called for more stimulus while the European Union suggested austerity, so the end result, as is reflected in the bond and stock markets today, is that global growth will be limited. Slow economic growth supports the bond market.

Market commentary

U.S. Senate, House and White House conferees reached agreement on final amendments to what is called the “Wall Street” reform bill. Unfortunately this bill does little to reform Wall Street, but it will put a further tightening on credit availability while imposing fees to pay for the additional government agencies it establishes. The imposition of fees and taxes on banks to pay for the new bureaucrats, as we all know, will be paid by the consumer in the end. At a time when the economy can least afford it credit will become harder to obtain.

If there is good news to be derived from this, it is the market “vote”. And the vote today is a decline in stocks and an improvement in bond prices. Investors feel this legislation will place a further drag on the U.S. economy and therefore reduce corporate profit growth---meaning lower stock valuations. For those of us in mortgage land, the good news is interest rates will remain at low levels as long as investors feel economic growth will be hindered.

Market commentary

Bonds received a boost on Wednesday from the FOMC (Fed) announcement which downgraded slightly its assessment of the U.S. economy. As expected, the Fed will not be raising interest rates anytime soon.

The 5 year note auction was a horrible affair, one of the weaker sales reported in many months. Keep in mind today the U.S. Treasury will sell $30 billion of 7 year notes, so keep a watchful eye on the markets.

The bond market opened strong this morning, but has since faded to unchanged on the day, while stocks are lower. Take advantage of the rates sooner rather than later.

Market commentary

Bad news on the housing front has bond prices improving again today. This morning the Commerce Department reported new home sales fell to the lowest level since record keeping began back in 1963. Clearly the expiration of the home buyer tax credit has had a negative affect on purchases, in addition to the continued weakness in the labor market.

This news comes on the second day of the Fed policy meeting, so the markets will be waiting to hear how the Fed addresses the extremely weak housing market as well as the floundering economic recovery.

Prior to the Fed announcement the U.S. Treasury will auction $38 billion of 5 year notes. You will recall Tuesday’s 2 year note auction saw aggressive demand---this morning the yield on the 2 year note stands at .695%.

Market commentary

Existing home sales in May, which were expected to show and increase actually fell 2.2%, according to the National Association of Realtors. The Federal tax credit which expired April 30, was expected to provide a boost to home sales, and we still may see that in the June data, as purchases must be complete by June 30 to qualify for the tax credit.

Monday’s rally in the stock market faded as the day wore on, and stocks opened flat this morning. Bond prices continue to improve with mortgage bonds better by .125% to .25% in price.

The U.S. Treasury will auction $40 billion of 2 year notes today, and the Federal Reserve begins its two day policy meeting.