On the data front, the S & P Case Shiller Home Price Index slipped 0.05% in May, but April was revised to a gain of 0.44% from a loss of 0.09%. Therefore, the overall index of 138.87 was actually higher than the 139.80 projected. Year over year, however, the price of homes are down 4.5% from May of last year in the top 20 cities.
Again today the focus will continue to be the debt ceiling discussions. Keep in mind there is also a $35 billion auction of 2-year notes which should be watched closely. Last month’s auction was poorly received and given the dysfunction in Washington, demand is a concern.
Monday the bond market closed weaker with the yield on the 10 year note closing 3.01%. This morning we are seeing a slight improvement in bond prices as stock markets are trending lower.
Tuesday, July 26, 2011
Monday, July 25, 2011
Market commentary
The only news that matters today and the rest of this week are the deficit reduction and debt ceiling negotiations. I do find it interesting that news outlets focus on raising the debt ceiling as the only alternative. Ron Paul has a rather interesting, common sense solution. The largest holder of U.S. Treasury debt, approximately $1.6 trillion, is the Federal Reserve. So in effect the government is borrowing from itself, and we are paying interest to ourselves. Why not have the Fed cancel the debt?
Well, we know that will not happen, so until a resolution is in place the markets will remain volatile with the main beneficiary being gold.
Even with the debt ceiling issue unresolved, the U.S. Treasury has a total of $99 billion in auctions scheduled for this week, consisting of 2 yr, 5yr and 7 yr notes. Bonds and stocks are both trading lower today and mortgage prices are worse by approximately .125%.
Well, we know that will not happen, so until a resolution is in place the markets will remain volatile with the main beneficiary being gold.
Even with the debt ceiling issue unresolved, the U.S. Treasury has a total of $99 billion in auctions scheduled for this week, consisting of 2 yr, 5yr and 7 yr notes. Bonds and stocks are both trading lower today and mortgage prices are worse by approximately .125%.
Friday, July 22, 2011
Market commentary
Thursday’s news on a European bailout package and positive growth numbers from the Philadelphia Federal Reserve manufacturing index gave stocks another boost and continued to take away the flight to safety bid in the U.S. Treasury market. The yield on the 10 year note closed at 3.01%, near the high yield of the day.
This morning we are seeing headlines of renewed concerns on the European bailout so investors are once again moving into U.S. Treasuries, pushing the 10 year yield down to 2.98%. Mortgage prices have improved by .125% to .25%.
This morning we are seeing headlines of renewed concerns on the European bailout so investors are once again moving into U.S. Treasuries, pushing the 10 year yield down to 2.98%. Mortgage prices have improved by .125% to .25%.
Thursday, July 21, 2011
Market commentary
Initial Jobless Claims rose to 418,000 from 408,000. The prior week was revised from 405,000. Expectations were for 410,000. We continue to see jobless claims run at too high of a pace to indicate real job growth. This is a disappointing number, but obviously taking a back seat to a reported Greek bailout deal being agreed to.
A Reuters news headline reads: “The European Central Bank is willing to let Greece slip into temporary default as part of a crisis response that would involve a bond buyback but no new tax on banks, EU sources said on Thursday.”
Stocks and the euro rallied, erasing earlier losses, after the reports that European Union officials have come up with a plan to rescue Greece and stave off the contagion in other countries. U.S. Treasuries prices are weaker on this news with the yield on the 10 year note rising to 2.99% and mortgage prices worse by another .25%.
Gridlock remains in Washington D.C. on the debt ceiling and deficit reduction talks.
A Reuters news headline reads: “The European Central Bank is willing to let Greece slip into temporary default as part of a crisis response that would involve a bond buyback but no new tax on banks, EU sources said on Thursday.”
Stocks and the euro rallied, erasing earlier losses, after the reports that European Union officials have come up with a plan to rescue Greece and stave off the contagion in other countries. U.S. Treasuries prices are weaker on this news with the yield on the 10 year note rising to 2.99% and mortgage prices worse by another .25%.
Gridlock remains in Washington D.C. on the debt ceiling and deficit reduction talks.
Wednesday, July 20, 2011
Market commentary
Sales of previously owned U.S. homes unexpectedly declined in June to a seven month low as the industry struggled to overcome rising unemployment and foreclosures. According to the National Association of Realtors, purchases dropped 0.8% to a 4.77 million pace, inventories increased, and more contracts were canceled, while 30% of transactions last month were of distressed dwellings.
Mortgage applications for the week ending July 15 climbed 15.5%, led higher by applications for refinance which were up 23.1%.
Tuesday was all about the U.S. debt ceiling stalemate and a “last minute” deficit reduction proposal by a bi-partisan group of Senators that seemed to meet approval of the President. Stocks soared on the news with the DOW higher by 200 points and bonds rallied after beginning the day lower. This morning, however, this is all old news. Even The stellar earnings report from Apple is not enough to keep stocks in positive territory. The same can be said of bonds as we see yields rising, moving mortgage prices lower by .125% to .25%.
Mortgage applications for the week ending July 15 climbed 15.5%, led higher by applications for refinance which were up 23.1%.
Tuesday was all about the U.S. debt ceiling stalemate and a “last minute” deficit reduction proposal by a bi-partisan group of Senators that seemed to meet approval of the President. Stocks soared on the news with the DOW higher by 200 points and bonds rallied after beginning the day lower. This morning, however, this is all old news. Even The stellar earnings report from Apple is not enough to keep stocks in positive territory. The same can be said of bonds as we see yields rising, moving mortgage prices lower by .125% to .25%.
Tuesday, July 19, 2011
Market commentary
Bonds gave ground Monday with the 10 year yield rising from 2.88% to 2.92%. This morning the 10 year is up to 2.95%, and stocks are rebounding on strong earnings from IBM and Coca Cola. Earnings in the financial space are not so great, as Goldman Sachs missed projections and Bank of America reported a loss of $9.1 billion as B of A continues to set aside reserves for loan losses and settlements.
Housing starts for the month of June, released this morning, rose from 549,000 to 629,000 driven mostly by starts from multi-family construction which is up 30.4% month over month.
Monday, spreads on mortgages widened substantially to U.S. Treasuries, causing many lenders to worsen prices mid-day. This morning mortgage prices are lower again by .125% to .25%, bringing the two day loss to just over .50%. Traders I spoke with point to the stalled talks on the debt ceiling and the rating agencies potential downgrade of the U.S. as reasons for the price declines.
Housing starts for the month of June, released this morning, rose from 549,000 to 629,000 driven mostly by starts from multi-family construction which is up 30.4% month over month.
Monday, spreads on mortgages widened substantially to U.S. Treasuries, causing many lenders to worsen prices mid-day. This morning mortgage prices are lower again by .125% to .25%, bringing the two day loss to just over .50%. Traders I spoke with point to the stalled talks on the debt ceiling and the rating agencies potential downgrade of the U.S. as reasons for the price declines.
Friday, July 15, 2011
Market commentary
Debt ceiling debates, budget debates, dueling news conferences, economic data, earnings announcements and a threat from the rating agency Standard and Poor’s are all topics the markets are dealing with this morning. The threat from S&P to lower the AAA rating the U.S. now enjoys on its debt is a result of the impasse in Washington regarding the budget and debt ceiling.
On the economic front consumer prices dropped 0.2% in June, however, stripping out the volatile food and energy sectors prices rose .254%. Energy prices fell 4.4% month over month and were the largest contributor to the decline in the overall index.
Again on the consumer front, the Thomson Reuters/University of Michigan index of consumer sentiment decreased to 63.8, the weakest reading since March 2009, from 71.5 the prior month.
From the industry side of the U.S. economy the Federal Reserve announced this morning its index of Industrial Production rose 0.2% last month, reversing the 0.1% decline from the previous month.
Strong earnings from Google and Citibank initially powered the stock markets; however, the weak consumer confidence data put the brakes on the early rally. As of this writing stock indices and bonds are flat from Thursday’s close. Bonds closed weaker on Thursday so mortgage prices are worse by .125%.
On the economic front consumer prices dropped 0.2% in June, however, stripping out the volatile food and energy sectors prices rose .254%. Energy prices fell 4.4% month over month and were the largest contributor to the decline in the overall index.
Again on the consumer front, the Thomson Reuters/University of Michigan index of consumer sentiment decreased to 63.8, the weakest reading since March 2009, from 71.5 the prior month.
From the industry side of the U.S. economy the Federal Reserve announced this morning its index of Industrial Production rose 0.2% last month, reversing the 0.1% decline from the previous month.
Strong earnings from Google and Citibank initially powered the stock markets; however, the weak consumer confidence data put the brakes on the early rally. As of this writing stock indices and bonds are flat from Thursday’s close. Bonds closed weaker on Thursday so mortgage prices are worse by .125%.
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