Market commentary

Prince William and Kate Middleton are now married. Surprisingly, the markets appear to be unaffected as a result.

News that did hit the markets is best described by this headline: “Oil Prices Hitting Consumers”. This was particularly transparent in the report that personal income rose 0.5% in March, however, the moderate rise in incomes is barely enough to offset higher energy prices. Personal consumption rose 0.6% in the month and after subtracting out food and energy, spending only rose 0.1% in March. This tells us the higher oil prices are taking a big enough bite out of consumer expenditures to make real economic growth minimal.

The Chicago Purchasing Managers reported their business barometer dipped, but still reflects expanding economic activity.

Bond prices held firm Thursday in spite of a weak 7 year note auction, and commodity prices continue their trek higher following the Fed news release from this week’s FOMC meeting. Gold is up to $1,539/oz., silver is nearing $50/oz., and oil is trading north of $113/bbl. The U.S. dollar is trading at an 18 year low against the Chinese yaun.

The good news for us is mortgage prices are slightly better again today, just in time for the spring buying season.

Market commentary

Disappointing employment data this morning as Initial Jobless Claims surged 25,000 to 429,000, completely unexpected. It was disappointing to see the recent pop to 404,000, and expectations were for a small dip to 395,000.

In addition to the jobless claims, 1st Quarter GDP rose 1.8%, slightly lower than the 2.0% consensus and down from 4th quarter GDP of 3.1%. Higher energy prices, higher food prices, and the harsh winter weather were the main culprits for the decline in output.

Bond prices jumped on the news pushing interest rates lower. As the day wears on, however, the bond market is slipping causing mortgages to give back half of the days gains.

Market commentary

In this morning’s economic news, durable goods orders rose from 0.7% in February, a positive report that reflects continued business investment to which regional Fed surveys have been pointing.
Mortgage applications fell 5.6% as purchase applications fell 13.6%. Applications for mortgages continue to be space with refinance applications remaining well below their 10 year average despite mortgage rates remaining near four decade lows.

As usual on a Fed meeting day, the markets are eagerly awaiting the conclusion of the meeting when their official statement is released. Today it will be earlier than normal, 10:30 ET, giving the markets one hour and forty-five minutes to digest the statement before Chairman Bernanke will hold the FOMC’s first post-meeting press conference. The press conference is being held to improve transparency, per the FOMC. History tells us, however, that Fed Chairmen can speak at length without anyone learning a whole lot.

Tuesday saw a decent price improvement in bonds, which was a positive sign given the so-so results of the 2 year note auction. Today, in the midst of the Benanke’s news conference the U.S Treasury will auction $35 billion of 5 year notes.

This morning bond prices are giving back some of Tuesday’s gains with the yield on the 10 year note rising to 3.36%.

Market commentary

The Conference Board reported its consumer confidence index rose to 65.4 from a revised 63.8 reading in March. Perhaps consumers are more confident as the spring weather replaces the cold and snow. It seems unlikely confidence would be higher based on data from the S&P/Case-Shiller index of property values. Residential real estate prices fell 3.3% on a year over year basis from February 2010 to February 2011, the largest decline in more than a year. Given the decrease in home prices and the low interest rates, home affordability is at its best levels in decades. Tight underwriting guidelines and job uncertainty given the fiscal state of affairs in the U.S. are keeping buyers away.

Important topics to note for the remainder of the day are the beginning of the two day FOMC meeting today, gold is still above $1,500, oil remains over $112 per barrel, and the U.S. Treasury will auction $35 billion of 2 year notes.

The U.S. stock and bond markets are both in positive territory today, with the DOW trading higher by 120 points and the yield on the 10 year note falling to 3.34%. Mortgages are better by .125% to .25%.

Market commentary

New home sales rebounded in March after a dismal February, however, by all indicators this market has a long way to go on the road to recovery. The main focus for the markets this week will be the two day Fed meeting, which ends Wednesday. In addition to the standard post meeting policy statement, the Fed will also hold a press conference. It would be surprising if the financial media questions did not focus on the decline of the dollar, rising oil prices, or how QE2 might be responsible for commodity price increases.

In addition to the Fed meeting, the U.S. Treasury will auction, 2 year, 5 year, and 7 year notes, Tuesday, Wednesday, and Thursday, respectively. In front of the Fed meeting and debt auctions, bond prices are moving higher, pushing yields lower. The yield on the 10 year note has fallen to 3.65%.

Market commentary

Treasuries and mortgages closed weaker on Thursday, with the bond market closing early and all U.S. markets closed today.

Next week is a full economic calendar, a two day Fed meeting and more U.S. debt auctions of 2 year, 5 year and 7 year notes. The markets will be intently focused on Wednesday’s post meeting Fed announcement and the possibility of an early end to the Fed buying of U.S. Treasuries.

HSOA is open for business today, and the HSOA lock desk will be accepting locks until 12 noon, Pacific Time.

Market commentary

Mixed economic data this morning beginning with Initial jobless claims for the week ending April 16 falling from 416,000 the prior week to 403,000, remaining stubbornly above the 400,000 level. The four-week moving average is now up to 399,000.

The Philadelphia Fed reported is regional manufacturing activity index continued to grow in April but at a slower pace than last month. The index of current activity decreased to 18.5 from 43.4 in March.

And finally the Conference Board’s index of leading indicators rose 0.5% in March, the ninth consecutive monthly increase. This index suggests the U.S. economy will maintain growth for the next three to six months.

Mortgage bonds closed slightly lower on Wednesday; however, prices have improved this morning, so pricing is flat to Wednesday.