Market commentary

This week will be full of economic news with several critical data releases and Fed Chairman Bernanke’s semi-annual Humphrey Hawkins testimony before both chambers of Congress. In today’s data, personal spending in January rose only 0.2% versus expectations of 0.4%, while personal incomes rose a stronger than expected 1.0%.

The Institute for Supply Management-Chicago Inc. said today its business barometer for the manufacturing sector rose to 71.2 from 68.8 in January. This is the highest level since July 1988. Recall that a number greater than 50 signals expansion. On Thursday this week, we will see the gauge for the non-manufacturing sector which covers nearly 90% of the U.S. economy, and will tell us if the economic recovery is broad based.
The week will be capped off by the February labor reports including the official unemployment rate and the monthly change in non-farm payrolls. The unemployment rate is estimated to increase from 9.00% to 9.10% and payrolls are expected to increase by 179,000.

Of course the events in the Middle East and North Africa continue to be a focus for the stock and bond markets as does the brewing clash between Republicans and Democrats over a continuing resolution for the budget. A resolution must be passed by Friday, March 4th, lest the government shut down.

Bond prices are flat from the close on Friday as are mortgage prices.

Market commentary

The Thomson Reuters/University of Michigan reported its consumer confidence index climbed to 77.5 from 74.2 in January. And the Commerce Department revised 4th quarter GDP slightly lower to +2.8%, however, this is backward looking data and did not effect the markets.
In fact, the bond market is ignoring the economic data and instead focusing on stocks, oil, and Libya, bond prices closed higher on Thursday. The oil worries were eased somewhat as Saudi Arabia said it would make up any Libyan shortfall. After trading well above $100 per barrel Thursday morning, NYMEX crude closed the day lower at around $97 per barrel.
This morning, bonds are reversing the week’s trends trading a bit lower with stocks up nicely for the first time this week.

Market commentary

Treasuries prices are improving/interest rates falling, again this morning with the 10-year trading at 3.43%. The strong bid appears to be based partly on a flight to quality from the world unrest and partly on concerns that the rising oil prices could quell what is already a weak economic recovery. Gasoline prices are rising with the average price across the U.S. higher by over 50 cents per gallon since last February.
Durable goods orders rose 2.7% in January but fell 3.6% ex-transportation, making the overall weaker than expected.
Initial jobless claims fell back below the 400k mark to 391k for the week ending February 19th. The four-week moving average fell from 418k to 402k. The moving average is finally within striking range of the elusive 400k mark, which could be a positive for the next payroll report due a week from tomorrow.

Market commentary

The National Association of Realtors told us sales of previously owned homes increased 2.7% in January, an unexpected increase. Of those sales, 37% were distressed sales and 32% were all cash.

While this is relatively good news, the markets remain focused on the event in North Africa and the Middle East. With the Wall Street Journal reporting Libya is the 10th largest exporter of oil in the OPEC, oil prices continue to rise dramatically as conditions in Libya deteriorate.

Again this morning there is a slight flight to safety in the U.S. Treasury market with mortgage prices higher by approximately .125%.

Market commentary

Consumer confidence as measured by the Conference Board rose to a 3 year high in February, even as home price continue to falter. The S&P/Case Shiller index declined 0.4% in December 2010, and declined 2.4% year over year.
Stock and bond markets are generally ignoring the economic data as the focus is on events in the Middle East. Attention continues to focus on protests which turned especially violent in Libya with the Kadafi regime seemingly falling apart. The unrest in Libya is disrupting some oil shipments and, combined with continued protests in Bahrain and other Middle East countries, is shaking world energy markets. US crude oil futures are up sharply to a two and one-half year high this morning.
The U.S. Treasury market is seeing a flight to safety bid again this morning as we see the yield on the 10 year note fall below 3.50% to 3.49%. Mortgage prices are improved by approximately .375%.

Market commentary

Today, the economic calendar is dormant but there are still plenty of news items to watch. The Middle East situation continues to evolve and concerns are spreading to the oil markets. If you live in southern California, as I do, you are now paying almost $3.50/gal for regular gasoline. Bond prices have given back much of Thursday’s gains, so if you took advantage of the market yesterday and locked your loan(s), congratulations. This is no market to play with, just take what it gives you.

Monday is the President’s Day Holiday and Home Savings of America offices will be closed, as will the HSOA lock desk. Enjoy your long weekend!

Market commentary

An abundance of economic data and escalating unrest in the Middle East have the U.S. bond and stock markets in a quandary this morning. In the first of today’s economic releases, the initial jobless claims for the week ending February 12th rose from 385k to 410k, slightly above economists’ projections, and signaling continued weakness in the job market. Consumer prices, as measured by the Consumer Price Index rose slightly more-than-expected in January with the headline CPI rising 0.4% in January or 1.6% year over year. The monthly increase is largely attributed to rises in energy (up 2.1%) and food costs (up 0.5%). This increase in food prices is the largest since September 2008.
From the manufacturing sector, the Federal Reserve Bank of Philadelphia’s general economic index rose to 35.9, the highest level since January 2004, and the Conference Board told us its index of Leading Economic Indicators rose 0.1% in January. This is the seventh consecutive month LEI has been positive, which indicates the U.S. economy should continue its expansion for the next 3 to 6 months.

Back to the topic of inflation, the price of cotton topped $2 a pound today in New York trading, for the first time ever. Grain and soft commodity prices are on a steady march higher, as are energy prices.

Speaking of energy prices, the continued unrest in the Middle East and now the threat that Iran will send two warships through the Suez Canal has oil and gold prices higher.

So what do you do with all of this information? The positive economic data coupled with the prospect of higher inflation should have moved interest rates higher. Instead, we see a flight to safety bid in the U.S. Treasury market as global investors take note of the tensions in the Middle East. I believe this gives us a great opportunity to lock in decent rates and prices on your mortgage loans. At the open this morning we saw the yield on the 10 year note drop as low as 3.55%, and it is currently trading between 3.57% and 3.58%. Prices on mortgages have improved by .375% to .50%.