Market commentary

Weaker than expected growth in the U.S. economy as highlighted in today’s Gross Domestic Product report has created strong reactions in the U.S. stock and bond markets. Both markets are focusing on the consumption piece of the report, which shows consumer spending slowed dramatically. Stock prices are falling while we see a significant rally in treasuries and mortgage bonds.

Two post GDP reports, the Chicago Purchasing Managers Index and University of Michigan Consumer Confidence reflected strength in certain areas of manufacturing, although these reports were not enough to overcome the effect of the GDP report.

Market commentary

Wednesday’s 5 year note auction was well received and the Fed released its Beige Book which suggested weak economic growth in most areas of the U.S. These items allowed treasury and mortgage bond prices to firm late in the day.

This morning a decline in weekly jobless claims helped buoy the stock markets and pushed the yield on the 10 year note back to 3.04%. The only remaining item on today’s calendar is the Treasury’s $29 billion auction of 7 year notes.

Market commentary

New orders for U.S. manufactured goods such as cars, planes, and appliances, which are referred to in economic reports as Durable Goods; fell for a second straight month in June. This data coupled with other reports reflecting falling consumer confidence and anemic job suggest the economic growth is indeed slowing.

The market reactions have been fairly muted with U.S. stocks trading slightly lower, and bond prices lower as well. With falling bond prices we have seen interest rates move higher, with the yield on the 10 year note currently trading at 3.05%.

Tuesday’s $38 billion auction of 2 year notes was well received and investors are awaiting the results of today’s auction of $37 billion of 5 year notes.

Market commentary

Mixed economic data this morning with relatively good news for home prices as the S & P/Case-Shiller index of property values reflected a 4.6% year over year increase. This news was overshadowed by the Conference Board’s consumer confidence index which fell to 50.4, a five month low. Stocks turned lower after the consumer confidence data, and bonds are lower as well, nervously awaiting today’s auction of $38 billion in two year notes.

Market commentary

Bond prices declined on Friday on improved economic outlook and relief that only 7 of 91 European Banks failed their stress tests. While there is some concern the “stress” test was too lenient, the news was enough to move stock prices higher and bond prices lower.

This morning the Commerce Department announced new home sales for June rose 23.6%, although this was still the second slowest sales month since records keeping began in 1963. This data had little effect on the markets which are still trading from Friday’s news.

Bond prices are again falling with the yield on the 10 year note once again above 3%, trading at 3.03%, as the bond market prepares for this week’s Treasury auction of $104 billion; $38 billion of 2 year notes, $37 billion of 5 year notes and $29 billion of 7 year notes.

Market commentary

Bonds rallied sharply in the wake of Bernanke’s uncertain economic outlook on Wednesday, however, bond prices fell Thursday and are lower this morning as more positive corporate earnings reports have served to lift spirits and stock prices. Ford beat estimates nicely and is forecasting a continued steady rise in aggregate sales and profits. Verizon and McDonalds also beat. After digesting the morning’s earnings releases, the focus will be on the noon eastern release of the European stress tests of financial institutions. While subject to questions of transparency and severity, the stress tests are poised to answer some questions and remove some uncertainty from the Euro region. With US markets still open when released, the stress tests are poised to be market-moving.

Market commentary

Caterpillar, 3M, and UPS were among companies reporting strong second quarter earnings this morning, and the National Assn. of Realtors reported existing home sales fell only 5.3% in June. Many analysts had forecast a much steeper decline in home sales, so with the smaller than expected decline in housing and the strong earnings reports, U.S. stocks are rallying. Treasuries are giving back most of Wednesday afternoon’s gains, as are mortgage bonds.