Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Friday, October 28, 2011
Wednesday and Thursday hit hard on the bond and mortgage markets; the 10 yr note in the two days increased 25 bp in yield, mortgage rates up about 18 bp. The 10 yr price drop was 75/32, mortgage prices fell 34/32. The stock market measured by the DJIA increased 500 points in two days. This morning the 10 yr at 9:00 +12/32 at 2.34% -3 bp, mortgages at 9:00 +11/32 (.34 bp). It is not unusual that markets are trading a little better early this morning after the huge moves since Wednesday. Of course the moves were triggered by what on the surface has been taken as a fix for Europe's debt problems----at least for the time being; That China is saying it may be interested in buying some of the debt from the EFSF has been greeted with optimism (maybe too much), and the increase in the EFSF fund to 1T euros announced yesterday and get banks to take a 50% haircut on Greek debt was likely overdone but it was a little step forward.
In the meantime European officials are studying the idea of an International Monetary Fund channel for money for their enlarged rescue fund, as China said it needed more detail on any potential plan before deciding whether to contribute. China will want a lot from the EU, ECB and IMF before it actually commits; that country is in the driver's seat and will likely extract a lot of guarantees to step into the swamp of debt.
The last couple of months were marked with doom and gloom, savvy investors were heavily short equity markets expecting the US and Europe would fall back into recession. The current news out of Europe that sent US stock markets up yesterday was in part fueled by shorts having to cover as the computers were screaming to get out. Putting some perspective on all of it; Europe's problems are far from being under control, the US stock market has moved to anticipate the end of Europe's problems is at hand; the bond market is simply tracking moves in equities with no confidence on the Fed or economic outlook-----letting stock traders set the tone.
Next week the FOMC will meet, after the meeting and the policy statement Bernanke will hold a press conference, given recent events in Europe and the increase in US interest rates, especially mortgage rates his press conference will be one of the more critical ones he has held in months.
At 9:30 the DJIA opened down 14 points, the 10 yr note -12/32 at 2.34% -3 bp and mortgage prices up 10/32 (.31 bp).
At 8:30 Sept personal income was weaker than expected, up 0.1% against estimates of +0.3%; spending was on the mark, up 0.6%. Q3 employment cost index, expected up 0.6% was better in a sense up 0.3% and +2.0% yr/yr. There was no noticeable reaction to the two releases. At 9:55 the U. of Michigan consumer sentiment index was expected unchanged at 57.5, as reported the index was 60.9; current conditions index 75.1 frm 73.8, expectations index 51.8 frm 47.0 and the 12 month outlook at 45 frm 37. A better read than the consumer confidence report on Tuesday but there was no reaction to it in equities or the bond market.
For three weeks we set 2.30% on the 10 yr as support that must hold; yesterday the note ran through it to a high of 2.41% before closing at 2.37%. Now we look at 2.30% as a resistance level. Yesterday's breakout over 2.30% can't be confirmed yet, we want to see a day or two over that level; short covering yesterday may have exaggerated the move higher. That said, the bond and mortgage markets have been technically bearish for weeks and will not likely change unless there is a major change in sentiment over Europe OR what Bernanke might do at next week's FOMC meeting to drive long rates lower. So far the Fed's moves have failed to keep rates low as the fed had expected.
Friday, October 28, 2011
Thursday, October 27, 2011
Mortgage Market
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, October 27, 2011
The summit in Brussels yesterday is being considered a success this morning; US stock indexes rallying and US interest rates increasing on news that Europe's leaders have actually come with a plan that is supposed to isolate Greece from defaulting and taking some pressure off for the moment. Last-ditch talks with bank representatives led to the debt-relief accord,
bondholders will take 50% losses on Greek debt and boosted the firepower of the rescue fund. Measures include recapitalization of European banks, a potentially bigger role for the International Monetary Fund, a commitment from Italy to do more to reduce its debt and a signal from leaders that the European Central Bank will maintain bond purchases in the secondary market. The rescue fund (EFSF) is to be increased to 1 trillion euros ($1.4T). There are a lot of details yet to be worked out so while this is a breakthrough the problems are still not completely out of the woods; expect Europe to continue to drive global markets as more details must be resolved. It helped yesterday when China said it may be interested in buying some of the debt through the EFSF.
The reaction to European developments this morning is a huge rally in Europe's equity markets and in the US; at 9:00 this morning the DJIA was trading up 246 points, the 10 yr note testing important technical support level at 2.30% and mortgage prices at 9:00 -14/32 (.44 bp).
This morning weekly jobless claims were about as expected, down 2K to 402K, last week claims were revised to 404K frm 403K. Continuing claims were 3.645 mil down from 3.741 mil last week. Q3 GDP expected at +2.2% to +2.5% was on target at +2.5% after Q1 growth grew at 1.3%; final sales in Q3 were up 3.6%. The combination of Europe and Q3 GDP drove the DJIA to open +145 points, NASDAQ +72 and the S&P +23; by 9:35 the DJIA traded up 260 points.
Treasury rates increasing this morning driving mortgage prices lower and rates up. The 10 yr note is sitting right on what we consider key support at 2.30%, it hasn't been above 2.30% since mid-August. Strong GDP, strong auto sales, a slightly better new home sales in Sept and a better outlook in Europe are increasing optimism momentarily. The Europe relief rally began yesterday and is running hot again in early activity. Investors sighing relief but Europe still has a huge problem with Italy and Spain; Italy's debt is well over 1T euros more than the EFSF has in the present fund.
At 10:00 NAR reported August pending home sales were expected to be down 1.0%, sales fell 4.6%; yr/yr up 6.4%. Contracts signed not yet closed, the third month in a row pending sales have declined from the previous month. There has been no immediate reaction to the report.
At 1:00 Treasury will auction $29B of 7 yr notes; yesterday the 5 yr went off well but y the end of the day and this morning those notes are already underwater.
Today is critical for the bond market; the 10 yr note is at 2.28% at 10:00, it has tested 2.30% where we have support that must hold, a move above 2.30% would add additional technical weakness for the bond and mortgage markets.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, October 27, 2011
The summit in Brussels yesterday is being considered a success this morning; US stock indexes rallying and US interest rates increasing on news that Europe's leaders have actually come with a plan that is supposed to isolate Greece from defaulting and taking some pressure off for the moment. Last-ditch talks with bank representatives led to the debt-relief accord,
bondholders will take 50% losses on Greek debt and boosted the firepower of the rescue fund. Measures include recapitalization of European banks, a potentially bigger role for the International Monetary Fund, a commitment from Italy to do more to reduce its debt and a signal from leaders that the European Central Bank will maintain bond purchases in the secondary market. The rescue fund (EFSF) is to be increased to 1 trillion euros ($1.4T). There are a lot of details yet to be worked out so while this is a breakthrough the problems are still not completely out of the woods; expect Europe to continue to drive global markets as more details must be resolved. It helped yesterday when China said it may be interested in buying some of the debt through the EFSF.
The reaction to European developments this morning is a huge rally in Europe's equity markets and in the US; at 9:00 this morning the DJIA was trading up 246 points, the 10 yr note testing important technical support level at 2.30% and mortgage prices at 9:00 -14/32 (.44 bp).
This morning weekly jobless claims were about as expected, down 2K to 402K, last week claims were revised to 404K frm 403K. Continuing claims were 3.645 mil down from 3.741 mil last week. Q3 GDP expected at +2.2% to +2.5% was on target at +2.5% after Q1 growth grew at 1.3%; final sales in Q3 were up 3.6%. The combination of Europe and Q3 GDP drove the DJIA to open +145 points, NASDAQ +72 and the S&P +23; by 9:35 the DJIA traded up 260 points.
Treasury rates increasing this morning driving mortgage prices lower and rates up. The 10 yr note is sitting right on what we consider key support at 2.30%, it hasn't been above 2.30% since mid-August. Strong GDP, strong auto sales, a slightly better new home sales in Sept and a better outlook in Europe are increasing optimism momentarily. The Europe relief rally began yesterday and is running hot again in early activity. Investors sighing relief but Europe still has a huge problem with Italy and Spain; Italy's debt is well over 1T euros more than the EFSF has in the present fund.
At 10:00 NAR reported August pending home sales were expected to be down 1.0%, sales fell 4.6%; yr/yr up 6.4%. Contracts signed not yet closed, the third month in a row pending sales have declined from the previous month. There has been no immediate reaction to the report.
At 1:00 Treasury will auction $29B of 7 yr notes; yesterday the 5 yr went off well but y the end of the day and this morning those notes are already underwater.
Today is critical for the bond market; the 10 yr note is at 2.28% at 10:00, it has tested 2.30% where we have support that must hold, a move above 2.30% would add additional technical weakness for the bond and mortgage markets.
Wednesday, October 26, 2011
Mortgage Market
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, October 26, 2011
A nice rally yesterday in the bond and mortgage markets; this morning no follow-through. The 10 yr note at 7:00 was off 9/32 with stock indexes showing a better opening at 9:30 after the DJIA fell 207 points yesterday. Rate markets continue to move in tandem with equity indexes; better indexes equals weaker rate markets. The 10 yr note has a well defined range over the last two weeks, frm 2.27% to 2.10% unable to break in either direction. MBS markets also trading in a tight near term trendless range. Note the 10 yr note yield chart above, not only is the range clearly evident, the 10 is still above its key 20 and 40 day averages.
At 8:30 Sept durable goods orders were mixed; the overall down 0.8% with forecasts of 1.0%, ex-transportation orders were expected up 0.5% but increased 1.7%. Stock indexes improved on the data, its a very volatile series and today markets are fixated on the so-called summit meeting of Euro leaders later today. Europe's finance ministers cancelled their scheduled meeting yesterday implying there isn't a plan in place yet to save Greece, Italy and Spain. The issue now is what hits Europe's banks can accept on the worthless debt from those countries. The amount needed to save Italy and Spain is more than can be scraped together. Chancellor Angela Merkel invoked Germany’s “historic obligation” to defend the euro and Europe as she urged lawmakers to back a planned increase in the euro- area rescue fund’s capacity to staunch the debt crisis. The German parliament voted 503 to 89 to increase funding of the European Financial Stability Facility.
At 10:00 Sept new home sales, expected up 1.8% increased 5.7% to 313K annualized; at present pace there is a 6.2 months supply down from 6.6 months in August, the lowest since Apr 2010. The median sales price $204,400, down 10.4% yr/yr. No initial reaction to the better report, all attention is focused on Europe and not so much on US economic reports.
Treasuries being dragged lower on this afternoon's $35B 5 yr note auction, the whip-saw thinking about Europe's debt crisis (today some optimism) and the continually changing economic outlook. Yesterday there was concern that Europe would not get a deal done and some quarterly earnings not meeting expectations sending rates lower and stock indexes down; this morning traders easily selling treasuries as the stock market is better and the 10 yr didn't break down below 2.10%, the low in the last two weeks, that has kept recent rallies in check. The bond and mortgage markets are essentially trading in a narrow flat range as little conviction as to the outlook remains murky.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, October 26, 2011
A nice rally yesterday in the bond and mortgage markets; this morning no follow-through. The 10 yr note at 7:00 was off 9/32 with stock indexes showing a better opening at 9:30 after the DJIA fell 207 points yesterday. Rate markets continue to move in tandem with equity indexes; better indexes equals weaker rate markets. The 10 yr note has a well defined range over the last two weeks, frm 2.27% to 2.10% unable to break in either direction. MBS markets also trading in a tight near term trendless range. Note the 10 yr note yield chart above, not only is the range clearly evident, the 10 is still above its key 20 and 40 day averages.
At 8:30 Sept durable goods orders were mixed; the overall down 0.8% with forecasts of 1.0%, ex-transportation orders were expected up 0.5% but increased 1.7%. Stock indexes improved on the data, its a very volatile series and today markets are fixated on the so-called summit meeting of Euro leaders later today. Europe's finance ministers cancelled their scheduled meeting yesterday implying there isn't a plan in place yet to save Greece, Italy and Spain. The issue now is what hits Europe's banks can accept on the worthless debt from those countries. The amount needed to save Italy and Spain is more than can be scraped together. Chancellor Angela Merkel invoked Germany’s “historic obligation” to defend the euro and Europe as she urged lawmakers to back a planned increase in the euro- area rescue fund’s capacity to staunch the debt crisis. The German parliament voted 503 to 89 to increase funding of the European Financial Stability Facility.
At 10:00 Sept new home sales, expected up 1.8% increased 5.7% to 313K annualized; at present pace there is a 6.2 months supply down from 6.6 months in August, the lowest since Apr 2010. The median sales price $204,400, down 10.4% yr/yr. No initial reaction to the better report, all attention is focused on Europe and not so much on US economic reports.
Treasuries being dragged lower on this afternoon's $35B 5 yr note auction, the whip-saw thinking about Europe's debt crisis (today some optimism) and the continually changing economic outlook. Yesterday there was concern that Europe would not get a deal done and some quarterly earnings not meeting expectations sending rates lower and stock indexes down; this morning traders easily selling treasuries as the stock market is better and the 10 yr didn't break down below 2.10%, the low in the last two weeks, that has kept recent rallies in check. The bond and mortgage markets are essentially trading in a narrow flat range as little conviction as to the outlook remains murky.
Friday, October 21, 2011
Mortgage Rates
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Friday, October 21, 2011
Treasuries opened flat this morning, mortgages however are doing better with talk that the Fed will possibly increase its purchases of MBSs. Federal Reserve Governor Daniel Tarullo said the central bank should consider resuming purchases of mortgage bonds to boost U.S. growth. At 9:00 the 10 yr -2/32 while 30 yr mtgs +6/32 (.18 bp). Stock indexes prior to the open were better indicating a strong opening at 9:30.
Trade today will focus primarily on the equity markets, the stock market is strong early but that is no indication that at the end of the day the indexes won't end up lower. Likely to be choppy as has been the case, with not much change in the bond and mortgage markets. Technically the bond and mortgage markets remain bearish but there is room to improve without changing the wider outlook. If equities reverse from morning improvement rate markets will find support. Mortgages doing much better this morning on Fed comments.
News from Europe; there won't be anything coming this weekend but by Wednesday German officials are saying a deal will be resolved by next Wednesday. Still a lot of uncertainty from the region but at the moment markets are believing an end is in sight for the near term. Yesterday Greece parliament voted for additional austerity (lower spending), the vote was close and there was rioting but at the end of the day Greece appears to have met the demands of the ECB, IMF and the EU. European stocks advanced as policy makers discussed deploying $1.3 trillion in funds to help contain the euro area’s debt crisis as they sought to break a deadlock between Germany and France.
At 9:30 the DJIA opened +140, the 10 yr note -6/32 at 2.21% +3 bp; mortgage prices doing better on Fed official comment +4/32 (.12 bp).
The comment from Fed governor Tarullo that the Fed should increase MBS purchases to aid economic recovery comes as a surprise, as do most comments that hit from various Fed officials. A positive for mortgage rates of course, and for the economy if in fact the Fed actually takes his comment and implements it. Keeping mortgage rates low is a plus, however unless there is some relaxation of underwriting and appraisals many that could re-finance are being hampered by requirements that impede many from getting a lower rate even if they are current on their present payments.
There is no data today, investors and traders setting positions for the weekend and next week's meeting in Europe. Mortgage rates doing better today on Tarullo comments but if rates increase in treasuries so too will mortgage rates increase although if the Fed were to actually increase MBS purchases the spread between mortgage rates and the 10 yr note yield will narrow from present levels. Washington regulators and the lending community don't get it, we have harped on it for years with no avail.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Friday, October 21, 2011
Treasuries opened flat this morning, mortgages however are doing better with talk that the Fed will possibly increase its purchases of MBSs. Federal Reserve Governor Daniel Tarullo said the central bank should consider resuming purchases of mortgage bonds to boost U.S. growth. At 9:00 the 10 yr -2/32 while 30 yr mtgs +6/32 (.18 bp). Stock indexes prior to the open were better indicating a strong opening at 9:30.
Trade today will focus primarily on the equity markets, the stock market is strong early but that is no indication that at the end of the day the indexes won't end up lower. Likely to be choppy as has been the case, with not much change in the bond and mortgage markets. Technically the bond and mortgage markets remain bearish but there is room to improve without changing the wider outlook. If equities reverse from morning improvement rate markets will find support. Mortgages doing much better this morning on Fed comments.
News from Europe; there won't be anything coming this weekend but by Wednesday German officials are saying a deal will be resolved by next Wednesday. Still a lot of uncertainty from the region but at the moment markets are believing an end is in sight for the near term. Yesterday Greece parliament voted for additional austerity (lower spending), the vote was close and there was rioting but at the end of the day Greece appears to have met the demands of the ECB, IMF and the EU. European stocks advanced as policy makers discussed deploying $1.3 trillion in funds to help contain the euro area’s debt crisis as they sought to break a deadlock between Germany and France.
At 9:30 the DJIA opened +140, the 10 yr note -6/32 at 2.21% +3 bp; mortgage prices doing better on Fed official comment +4/32 (.12 bp).
The comment from Fed governor Tarullo that the Fed should increase MBS purchases to aid economic recovery comes as a surprise, as do most comments that hit from various Fed officials. A positive for mortgage rates of course, and for the economy if in fact the Fed actually takes his comment and implements it. Keeping mortgage rates low is a plus, however unless there is some relaxation of underwriting and appraisals many that could re-finance are being hampered by requirements that impede many from getting a lower rate even if they are current on their present payments.
There is no data today, investors and traders setting positions for the weekend and next week's meeting in Europe. Mortgage rates doing better today on Tarullo comments but if rates increase in treasuries so too will mortgage rates increase although if the Fed were to actually increase MBS purchases the spread between mortgage rates and the 10 yr note yield will narrow from present levels. Washington regulators and the lending community don't get it, we have harped on it for years with no avail.
Thursday, October 20, 2011
Mortgage Market
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, October 20, 2011
Treasuries and mortgages opened a little weaker this morning. At 8:30 more selling after weekly jobless claims that fell 6K to 403K frm 409K last week (revised frm 404K); continuing claims were 3.719 mil up frm 3.694 mil last week.
Claims didn't generate selling, there are early reports unconfirmed so far, that Kaddafi has been killed.
Also there is that ever present belief Europe will get a plan worked out prior to this weekend's G-20 meeting. Germany and France still in disagreement over the role to be played by the ECB in the bank re-capitalization after the banks take huge losses over the bad debt of Greece and then the other troubled counties in the EU. a day before a finance ministers’ meeting in Brussels intended to set a common strategy on dealing with the turmoil there is nothing concrete. Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro-area finance ministers, indicated an impromptu meeting of European leaders in Frankfurt last night failed to resolve differences. French Prime Minister Francois Fillon stepped up calls for the 440 billion-euro ($608B) European Financial Stability Facility to be turned into a bank and given leverage by the ECB which, along with Germany, has rejected using its balance sheet to bolster the fund. Germany has endorsed enabling the EFSF to insure a portion of cash-strapped nations’ bond sales. Given the news reports over the differences it is a huge step of faith to believe a workable plan can be done prior to the G-20 meeting this weekend. Meanwhile in Greece riots are continuing over the deep austerity that must be in place to get more cash; Greece will run out of money in a few weeks.
Greece will default; I don't think anyone in the EU believes it won't. What seems to be happening in the negotiations is a plan to contain the defaults of Spain, Italy and Portugal. The EU cannot afford to let those countries to fall otherwise it is the end of the EU experiment that began 12 years ago when 17 countries agreed to join together with a common currency and common economic goals.
At 9:00 this morning treasuries and mortgages had come off their lowest prices earlier; the 10 -2/32 and mortgages -4/32 (.12 bp). The DJIA at 8:30 was +45, at 9:00 +2. US interest rate markets still welded to the action in equities. Likely that will be the way it goes the rest of today.
At 9:30 the DJIA +5, 10 yr note -7/32 at 2.18% +2 bp. Mortgage prices at 9:30 -7/32 (.22 bp).
Three key data points hit at 10:00. Sept existing home sales were expected to decline 1.8%, as reported sales fell 3.0% to 4.91 mil annualized; August sales revised to +8.8% frm +7.7%, inventories of unsold homes down 2.0% leaving an 8.5 month supply. Leading economic indicators for Sept was up 0.2% in line with forecasts. The giant in the room; the Oct Philly fed business index was expect -9.6 frm -17.5 in Sept; as reported it increased to +8.7. The components were mixed, new orders at 7.8 frm -11.3, prices pd at 20.0 frm 23.3 and employment at 1.4 frm 5.8. The initial reaction to the three reports didn't do much to stocks or bonds.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Thursday, October 20, 2011
Treasuries and mortgages opened a little weaker this morning. At 8:30 more selling after weekly jobless claims that fell 6K to 403K frm 409K last week (revised frm 404K); continuing claims were 3.719 mil up frm 3.694 mil last week.
Claims didn't generate selling, there are early reports unconfirmed so far, that Kaddafi has been killed.
Also there is that ever present belief Europe will get a plan worked out prior to this weekend's G-20 meeting. Germany and France still in disagreement over the role to be played by the ECB in the bank re-capitalization after the banks take huge losses over the bad debt of Greece and then the other troubled counties in the EU. a day before a finance ministers’ meeting in Brussels intended to set a common strategy on dealing with the turmoil there is nothing concrete. Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro-area finance ministers, indicated an impromptu meeting of European leaders in Frankfurt last night failed to resolve differences. French Prime Minister Francois Fillon stepped up calls for the 440 billion-euro ($608B) European Financial Stability Facility to be turned into a bank and given leverage by the ECB which, along with Germany, has rejected using its balance sheet to bolster the fund. Germany has endorsed enabling the EFSF to insure a portion of cash-strapped nations’ bond sales. Given the news reports over the differences it is a huge step of faith to believe a workable plan can be done prior to the G-20 meeting this weekend. Meanwhile in Greece riots are continuing over the deep austerity that must be in place to get more cash; Greece will run out of money in a few weeks.
Greece will default; I don't think anyone in the EU believes it won't. What seems to be happening in the negotiations is a plan to contain the defaults of Spain, Italy and Portugal. The EU cannot afford to let those countries to fall otherwise it is the end of the EU experiment that began 12 years ago when 17 countries agreed to join together with a common currency and common economic goals.
At 9:00 this morning treasuries and mortgages had come off their lowest prices earlier; the 10 -2/32 and mortgages -4/32 (.12 bp). The DJIA at 8:30 was +45, at 9:00 +2. US interest rate markets still welded to the action in equities. Likely that will be the way it goes the rest of today.
At 9:30 the DJIA +5, 10 yr note -7/32 at 2.18% +2 bp. Mortgage prices at 9:30 -7/32 (.22 bp).
Three key data points hit at 10:00. Sept existing home sales were expected to decline 1.8%, as reported sales fell 3.0% to 4.91 mil annualized; August sales revised to +8.8% frm +7.7%, inventories of unsold homes down 2.0% leaving an 8.5 month supply. Leading economic indicators for Sept was up 0.2% in line with forecasts. The giant in the room; the Oct Philly fed business index was expect -9.6 frm -17.5 in Sept; as reported it increased to +8.7. The components were mixed, new orders at 7.8 frm -11.3, prices pd at 20.0 frm 23.3 and employment at 1.4 frm 5.8. The initial reaction to the three reports didn't do much to stocks or bonds.
Wednesday, October 19, 2011
Mortgage Market
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, October 19, 2011
Prior to 8:30 mortgage prices traded down 6/32 (.18 bp) and the 10 yr -8/32 to 2.20%. At 8:30 Sept CPI increased 0.3% overall and when food and energy are removed up 0.1%; yr/yr CPI +3.9%, the core yr/yr up 2.0%. Yesterday's PPI was stronger than expected increasing concerns that inflation may be increasing, today the CPI takes a little worry away but not totally. Also at 8:30 Sept housing starts and permits; starts were expected up 4.0% as reported starts increased 15.0%; permits were expected down 1.5% but declined 5.0%. Starts are a surprise, so much so that we question the data. Starts totaled 658K annually frm 572K in August; permits at 594K down from 625K in August. Single family starts were up 1.7% the rest was in multi-family starts (+50%). The initial reaction the the 8:30 data took the 10 yr down in price a little, mortgage prices at 8:45 -5/32 (.15 bp).
In Europe this morning, riots in Greece; protestors being gassed as it escalates. Yesterday's maniacal reaction to a headline in a British newspaper that a deal was in the offing to increase the EFSF to re-capitalize the banks in the region sent markets into another round of excessive volatility. One hour after the news it became apparent that the news was woefully lacking in fact and substance. There is no plan that has been resolved. Markets, as noted yesterday, don't wait for facts these days; it is all about headlines and in turn creates huge volatile swings.
Europe continues to drive global markets, every word out of the region is taken as the last word. There is still nothing of substance after over a year of discussions; Europe's banks do not want to take the haircut that will likely be necessary. Most of the sovereign debt has to be taken as losses at least by 50% or more, banks will continue to fight it. Politicians here and there remain convinced a plan will be worked out that will stabilize Italy, Spain and Portugal as well as keeping Greece from default. The problem with that is, so far after all this time there is nothing. On Oct 23rd finance ministers from the G-20 countries will meet in a summit, at the moment its in the hands of Germany and France, the only two EU countries that are not in some way impaired. German Finance Minister Schaeuble hasn’t specified how much additional strength the European bailout fund may have and negotiators are still in “intensive discussions.” What's new about that?
Early this morning the weekly MBA mortgage applications; the composite index declined 14.9%, purchase applications down 8.8% while re-finances declined 16.6%. Higher interest rates dropped the re-finance markets, purchases remain soft. There is an anomaly though, the week included Columbus Day, the few that are optimistic about the housing sector are making a lot out of the holiday, we don't hold much to that. Any even small increase in mortgage rates shuts of the flow, mortgage rates and treasuries were higher last week.
At 9:30 this morning the DJIA opened -22, NASDAQ-12, S&P -3; the 10 yr note -6/32 to 2.19% +2 bp and mortgages unchanged. Until 9:30 mtg prices were generally off 4/32 (.12 bp).
The only other scheduled information today is at 2:00 when the Fed releases its Beige Book, the Fed's detailed report on the economy in the 12 Fed districts. Always some meat in it but generally nothing shocking and new markets are not already thinking about-----that of course is if anyone is actually thinking these days rather than reacting.
Treasury and mortgage markets remain bearish; until the 10 yr can decline below 2.0% the bearish technicals will continue. That said, we remain confident that the 10 yr will find support at 2.30%, the recent high was 2.27% five sessions ago. The Fed's Operation Twist is still out there and the Fed has increased MBS purchases. Interday and intraday volatility will continue following the paranoid equity markets. Already this morning 30 yr MBSs have traded in a .34 basis point range. The treasury market is being stretched between better equity markets and the need for safety as Europe is still in play; equity markets a little weaker early today keeping rate markets generally unchanged so far.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Wednesday, October 19, 2011
Prior to 8:30 mortgage prices traded down 6/32 (.18 bp) and the 10 yr -8/32 to 2.20%. At 8:30 Sept CPI increased 0.3% overall and when food and energy are removed up 0.1%; yr/yr CPI +3.9%, the core yr/yr up 2.0%. Yesterday's PPI was stronger than expected increasing concerns that inflation may be increasing, today the CPI takes a little worry away but not totally. Also at 8:30 Sept housing starts and permits; starts were expected up 4.0% as reported starts increased 15.0%; permits were expected down 1.5% but declined 5.0%. Starts are a surprise, so much so that we question the data. Starts totaled 658K annually frm 572K in August; permits at 594K down from 625K in August. Single family starts were up 1.7% the rest was in multi-family starts (+50%). The initial reaction the the 8:30 data took the 10 yr down in price a little, mortgage prices at 8:45 -5/32 (.15 bp).
In Europe this morning, riots in Greece; protestors being gassed as it escalates. Yesterday's maniacal reaction to a headline in a British newspaper that a deal was in the offing to increase the EFSF to re-capitalize the banks in the region sent markets into another round of excessive volatility. One hour after the news it became apparent that the news was woefully lacking in fact and substance. There is no plan that has been resolved. Markets, as noted yesterday, don't wait for facts these days; it is all about headlines and in turn creates huge volatile swings.
Europe continues to drive global markets, every word out of the region is taken as the last word. There is still nothing of substance after over a year of discussions; Europe's banks do not want to take the haircut that will likely be necessary. Most of the sovereign debt has to be taken as losses at least by 50% or more, banks will continue to fight it. Politicians here and there remain convinced a plan will be worked out that will stabilize Italy, Spain and Portugal as well as keeping Greece from default. The problem with that is, so far after all this time there is nothing. On Oct 23rd finance ministers from the G-20 countries will meet in a summit, at the moment its in the hands of Germany and France, the only two EU countries that are not in some way impaired. German Finance Minister Schaeuble hasn’t specified how much additional strength the European bailout fund may have and negotiators are still in “intensive discussions.” What's new about that?
Early this morning the weekly MBA mortgage applications; the composite index declined 14.9%, purchase applications down 8.8% while re-finances declined 16.6%. Higher interest rates dropped the re-finance markets, purchases remain soft. There is an anomaly though, the week included Columbus Day, the few that are optimistic about the housing sector are making a lot out of the holiday, we don't hold much to that. Any even small increase in mortgage rates shuts of the flow, mortgage rates and treasuries were higher last week.
At 9:30 this morning the DJIA opened -22, NASDAQ-12, S&P -3; the 10 yr note -6/32 to 2.19% +2 bp and mortgages unchanged. Until 9:30 mtg prices were generally off 4/32 (.12 bp).
The only other scheduled information today is at 2:00 when the Fed releases its Beige Book, the Fed's detailed report on the economy in the 12 Fed districts. Always some meat in it but generally nothing shocking and new markets are not already thinking about-----that of course is if anyone is actually thinking these days rather than reacting.
Treasury and mortgage markets remain bearish; until the 10 yr can decline below 2.0% the bearish technicals will continue. That said, we remain confident that the 10 yr will find support at 2.30%, the recent high was 2.27% five sessions ago. The Fed's Operation Twist is still out there and the Fed has increased MBS purchases. Interday and intraday volatility will continue following the paranoid equity markets. Already this morning 30 yr MBSs have traded in a .34 basis point range. The treasury market is being stretched between better equity markets and the need for safety as Europe is still in play; equity markets a little weaker early today keeping rate markets generally unchanged so far.
Tuesday, October 18, 2011
Mortgage Market
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, October 18, 2011
Prior to 8:30 this morning the 10 yr note traded up 12/32 to 2.11% -5 bp frm yesterday's close; the MBS market up 4/32 (.12 bp). At 8:30 Sept PPI took some wind away, the overall PPI increased by 0.8%, markets were expecting an increase of 0.2%. The core rate however was in line up 0.2%. Yr/yr data is where the cheese binds; up 6.9% on the overall, up frm +6.5% in August, yr/yr on the core was +2.5% unchanged from August. While inflation isn't on the radar now, with the increase in the overall PPI and the core at what the Fed considers neutral (not too hot but not too tame either) inflation concerns notched up fractionally in the backs of the minds of traders. Inflation in Britain is at a three year high and may translate into the trading of US treasuries at the long end particularly. At 8:45, 15 minutes after the PPI mortgage prices traded unchanged on the day.
By 9:00 the early strong rally in the bond and mortgage markets had vanished; the 10 yr unchanged and mortgage prices down 3/32 (.09 bp). In early trading in stock indexes were lower (DJIA -50), at 9:00 the key indexes had improved to point to a firmer open at 9:30. Treasury and mortgage markets are completely controlled by how stock markets trade; with the huge volatile swings in the indexes trading bonds and MBSs keeps the rate markets volatile.
At 9:30 the DJIA opened -27, but the NASDAQ and S&P did open a little better. Mtg prices at 9:30 +1/32 (.03 bp) and the 10 yr note up 4/32 at 2.14% -2 bp.
At 10:00 the Oct NAHB housing mkt index, expected at 14, jumped to 18, the highest index reading in months. Last month the index was 14. Any improvement is good news; the line between positive and negative is 50. There has been no initial reaction to the improvement.
Europe still carries heavy weight on global markets as it can't step up and get some kind of resolution resolved. Eventually it will but as has been the case for over a year now, it won't solve the longer term problems. The on again off again travails are the prime drivers in the global markets. In China the economy grew 9.1% in the third quarter from a year earlier, the slowest pace since 2009, driving stocks lower on concern that Europe’s debt crisis is dragging on the global recovery. China, an export economy, saw shipments to the European Union tumbled to 9.8% in September from 22% in the previous month. U.S. corporate credit risk rose on concern that Europe’s debt crisis may spread after Moody’s Investors Service signaled that France’s Aaa credit rating is under pressure.
Regardless of all other fundamentals the bond and mortgage markets are tied to stock indexes tighter than a hangman's knot. Moody's saying today it may downgrade France credit rating aided the early morning improvement but with the US equity markets opening better at 9:30, it trumped any safety moves to bonds. It didn't help this morning when over PPI increase by a huge 0.8% and news that Britain's inflation rate the highest in 3 years.
At 1:15 this afternoon Bernanke will speak at a conference at the Boston Fed. With the current increase in rates after Operation Twist that was supposed to keep rates down, traders will focus on any remarks that address inflation and what Bernanke says regarding interest rates. Speculation on remarks about Europe, the economy, and comments on what the Fed is thinking about the mess in Congress and this Administration. He has made it clear the next major steps on reviving the economy must be fiscal, not monetary.
We remind that the bond and mortgage markets are still technically bearish, any improvement on the 10 yr note down to 2.05% area won't change the near term outlook. That said, we continue to expect any selling in the 120 yr note will hold at 2.30%, the recent interday high hit 2.27% last Wednesday and Friday.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Tuesday, October 18, 2011
Prior to 8:30 this morning the 10 yr note traded up 12/32 to 2.11% -5 bp frm yesterday's close; the MBS market up 4/32 (.12 bp). At 8:30 Sept PPI took some wind away, the overall PPI increased by 0.8%, markets were expecting an increase of 0.2%. The core rate however was in line up 0.2%. Yr/yr data is where the cheese binds; up 6.9% on the overall, up frm +6.5% in August, yr/yr on the core was +2.5% unchanged from August. While inflation isn't on the radar now, with the increase in the overall PPI and the core at what the Fed considers neutral (not too hot but not too tame either) inflation concerns notched up fractionally in the backs of the minds of traders. Inflation in Britain is at a three year high and may translate into the trading of US treasuries at the long end particularly. At 8:45, 15 minutes after the PPI mortgage prices traded unchanged on the day.
By 9:00 the early strong rally in the bond and mortgage markets had vanished; the 10 yr unchanged and mortgage prices down 3/32 (.09 bp). In early trading in stock indexes were lower (DJIA -50), at 9:00 the key indexes had improved to point to a firmer open at 9:30. Treasury and mortgage markets are completely controlled by how stock markets trade; with the huge volatile swings in the indexes trading bonds and MBSs keeps the rate markets volatile.
At 9:30 the DJIA opened -27, but the NASDAQ and S&P did open a little better. Mtg prices at 9:30 +1/32 (.03 bp) and the 10 yr note up 4/32 at 2.14% -2 bp.
At 10:00 the Oct NAHB housing mkt index, expected at 14, jumped to 18, the highest index reading in months. Last month the index was 14. Any improvement is good news; the line between positive and negative is 50. There has been no initial reaction to the improvement.
Europe still carries heavy weight on global markets as it can't step up and get some kind of resolution resolved. Eventually it will but as has been the case for over a year now, it won't solve the longer term problems. The on again off again travails are the prime drivers in the global markets. In China the economy grew 9.1% in the third quarter from a year earlier, the slowest pace since 2009, driving stocks lower on concern that Europe’s debt crisis is dragging on the global recovery. China, an export economy, saw shipments to the European Union tumbled to 9.8% in September from 22% in the previous month. U.S. corporate credit risk rose on concern that Europe’s debt crisis may spread after Moody’s Investors Service signaled that France’s Aaa credit rating is under pressure.
Regardless of all other fundamentals the bond and mortgage markets are tied to stock indexes tighter than a hangman's knot. Moody's saying today it may downgrade France credit rating aided the early morning improvement but with the US equity markets opening better at 9:30, it trumped any safety moves to bonds. It didn't help this morning when over PPI increase by a huge 0.8% and news that Britain's inflation rate the highest in 3 years.
At 1:15 this afternoon Bernanke will speak at a conference at the Boston Fed. With the current increase in rates after Operation Twist that was supposed to keep rates down, traders will focus on any remarks that address inflation and what Bernanke says regarding interest rates. Speculation on remarks about Europe, the economy, and comments on what the Fed is thinking about the mess in Congress and this Administration. He has made it clear the next major steps on reviving the economy must be fiscal, not monetary.
We remind that the bond and mortgage markets are still technically bearish, any improvement on the 10 yr note down to 2.05% area won't change the near term outlook. That said, we continue to expect any selling in the 120 yr note will hold at 2.30%, the recent interday high hit 2.27% last Wednesday and Friday.
Monday, October 17, 2011
Mortgage Market
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, October 17, 2011
Treasuries and MBS markets opened flat early this morning but got some support at 9:00 as stock indexes softened a little. Helping the bond market some this morning, the Oct NY Empire State manufacturing index expected -4.4 frm -8.82% in Sept was -8.48; the sub components were a little better but still very weak. At 9:15 Sept industrial production reported +0.2% right on the forecasts. Sept capacity utilization also in line, at 77.4% frm 77.3% in August. No initial reaction to the reports.
Europe will continue to draw attention this week, it may not be obvious but under the radar and other driving events Europe is still unsettled. Last week markets were enthused on comments that the EU has com up with a plan that includes banks taking huge hits. Over the weekend the has been some push-back from Europe's banks. Opposition from banks may hamper efforts by German Chancellor Angela Merkel and French President Nicolas Sarkozy to present a breakthrough at an Oct. 23 summit of euro leaders in combating the crisis, which has driven Greece toward default, roiled global markets and dented confidence in the survival of the 17- nation currency. In the end the situation is still unresolved and is unlikely to be resolved by Oct 23, the so-called date to have it all worked out. The significance is that as long as there is no actual resolution the US interest rate markets and the US equity markets will continue with their volatility.
At 9:30 the DJIA opened -50, the 10 yr +9/32 at 2.22% -3 bps; mortgage prices at 9:30 +4/32 (.12 bp).
This Week's Economic Calendar:
Today;
8:30 am NY Empire State index -8.48 frm -8.82
9:15 am Sept Capacity Utilization 77.4% frm 77.3%
Sept industrial production +0.2%
Tuesday;
8:30 am Sept PPI (+0.2%, ex food and energy +0.1%)
10:00 am Oct NAHB housing mkt index (14, unchanged from Sept)
Wednesday;
7:00 am weekly MBA mortgage applications
8:30 am Sept CPI (+0.3%, ex food and energy +0.2%)
Sept housing starts and permits( starts +4.0%, permits -1.5%)
2:00 pm Fed's Beige Book
Thursday;
8:30 am weekly jobless claims (unch at 404K)
10:00 am Sept existing home sales (-1.8%)
Oct Philly Feed business index (-9.6 frm -17.5)
Sept leading economic indicators (+0.3%)
Treasury 10-year notes better, pushing yields down from the highest level in seven weeks, as concern Europe may take longer to contain sovereign debt turmoil boosted demand for the safest assets. We still believe the 10 yr note yield won't increase past 2.30%; the high in the recent increase has been 2.27%. With continued concerns over how, or if, Europe can solve its debt issues US markets will continue to trade in swings on each comment out of the region. Germany said European Union leaders won’t provide the complete fix to the euro-area debt crisis that global policy makers are pushing for at an Oct. 23 summit.
Although there is no way Europe can meet the Oct 23rd target that had been thought, markets still believe some kind of resolution, foreign investors in US bond markets are selling on that belief. The Federal Reserve reported its holdings of U.S. government debt on behalf of central bankers and institutional investors outside America has plunged $76.5B in the last seven weeks, the most since August 2007. At the same time, bond mutual funds are adding Treasuries, banks have increased their holdings 45% in the past five years and the Fed has added $656B to its balance sheet this year.
Technically the 10 yr note and MBSs are bearish at the moment.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, October 17, 2011
Treasuries and MBS markets opened flat early this morning but got some support at 9:00 as stock indexes softened a little. Helping the bond market some this morning, the Oct NY Empire State manufacturing index expected -4.4 frm -8.82% in Sept was -8.48; the sub components were a little better but still very weak. At 9:15 Sept industrial production reported +0.2% right on the forecasts. Sept capacity utilization also in line, at 77.4% frm 77.3% in August. No initial reaction to the reports.
Europe will continue to draw attention this week, it may not be obvious but under the radar and other driving events Europe is still unsettled. Last week markets were enthused on comments that the EU has com up with a plan that includes banks taking huge hits. Over the weekend the has been some push-back from Europe's banks. Opposition from banks may hamper efforts by German Chancellor Angela Merkel and French President Nicolas Sarkozy to present a breakthrough at an Oct. 23 summit of euro leaders in combating the crisis, which has driven Greece toward default, roiled global markets and dented confidence in the survival of the 17- nation currency. In the end the situation is still unresolved and is unlikely to be resolved by Oct 23, the so-called date to have it all worked out. The significance is that as long as there is no actual resolution the US interest rate markets and the US equity markets will continue with their volatility.
At 9:30 the DJIA opened -50, the 10 yr +9/32 at 2.22% -3 bps; mortgage prices at 9:30 +4/32 (.12 bp).
This Week's Economic Calendar:
Today;
8:30 am NY Empire State index -8.48 frm -8.82
9:15 am Sept Capacity Utilization 77.4% frm 77.3%
Sept industrial production +0.2%
Tuesday;
8:30 am Sept PPI (+0.2%, ex food and energy +0.1%)
10:00 am Oct NAHB housing mkt index (14, unchanged from Sept)
Wednesday;
7:00 am weekly MBA mortgage applications
8:30 am Sept CPI (+0.3%, ex food and energy +0.2%)
Sept housing starts and permits( starts +4.0%, permits -1.5%)
2:00 pm Fed's Beige Book
Thursday;
8:30 am weekly jobless claims (unch at 404K)
10:00 am Sept existing home sales (-1.8%)
Oct Philly Feed business index (-9.6 frm -17.5)
Sept leading economic indicators (+0.3%)
Treasury 10-year notes better, pushing yields down from the highest level in seven weeks, as concern Europe may take longer to contain sovereign debt turmoil boosted demand for the safest assets. We still believe the 10 yr note yield won't increase past 2.30%; the high in the recent increase has been 2.27%. With continued concerns over how, or if, Europe can solve its debt issues US markets will continue to trade in swings on each comment out of the region. Germany said European Union leaders won’t provide the complete fix to the euro-area debt crisis that global policy makers are pushing for at an Oct. 23 summit.
Although there is no way Europe can meet the Oct 23rd target that had been thought, markets still believe some kind of resolution, foreign investors in US bond markets are selling on that belief. The Federal Reserve reported its holdings of U.S. government debt on behalf of central bankers and institutional investors outside America has plunged $76.5B in the last seven weeks, the most since August 2007. At the same time, bond mutual funds are adding Treasuries, banks have increased their holdings 45% in the past five years and the Fed has added $656B to its balance sheet this year.
Technically the 10 yr note and MBSs are bearish at the moment.
Monday, October 3, 2011
Mortgage Market
Anthony Hood
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, October 03, 2011
The bond and mortgage markets started nicely this morning with early trading in stock index futures were pointing to a weaker open at 9:30. Friday the bond market held its key supports then rallied as the stock market basis the DJIA dropped 240 points. Stock indexes still quite volatile and likely will remain that way for a long time as investors and traders try to make a buck with high frequency trading.
The economy is declining yet there are those that believe these are buying opportunities for that "in the long run" investments----most that espouse that view are Wall Street firms that make money on investor buying. Greece failed its austerity tests the the EU, IMF and the ECB demanded but the EU isn't ready to let Greece fail yet, only a matter of time though it will. Its time to cut the country loose and let it fail. For months global markets and economies have been focusing on Greece and what European leaders will do. Europe's banks don't want to take loses, unfortunately for them there isn't any choice in the end.
This week has a lot of economic releases but the key is Friday's employment report. Euro-area finance chiefs will meet today in Luxembourg to weigh the threat of a Greek default, grapple with how to shield banks from the fallout and consider a further boost to the rescue fund. A much-needed “liquidity backstop” for the region must come from governments because the European Central Bank’s mandate requires it to keep purchases of sovereign debt extremely limited.
At 9:30 the DJIA opened -30, NASDAQ -12, S&P -4; the 10 yr note +15/32 to 1.87% -5 bp, mortgage prices on 30s +13/32 (.41 bp).
At 10:00 this morning Sept ISM manufacturing index expected at 50.5 frm 50.6, increased to 51.6; new orders component unchanged at 49.6, prices pd at 56.0 frm 55.5 and employment at 53.8 frm 51.8. The initial reaction to the better data turned stock indexes from -89 on the DJIA to -25, the 10 yr note traded +198/32 prior to 10:00 but generally held as safety trades being put back on with Greece unable to meet the goals for more funds.
Also at 10:00 August construction spending expected own -0.5%, as reported spending increased 1.4%.
This Week's Economic Calendar:
Monday;
10:00 am Sept ISM manufacturing index (as reported 51.6)
August construction spending (as reported +1.4%)
3:00 pm Sept auto and truck sales (autos 4.1 mil, trucks +5.5 mil)
Tuesday;
10:00 am August factory orders (-0.1%)
Wednesday;
7:00 am MBA weekly mortgage applications
8:15 am ADP private jobs for Sept (+45K)
10:00 am ISM Sept services sector index (52.8 frm 53.3)
Thursday;
8:30 weekly jobless claims (+11K to 402K)
Friday;
8:30 Sept employment data (non-farm jobs +60K, non-farm private jobs +83K, unemployment rate unch at 9.1%)
10:00 am August wholesale inventories +0.5%)
3:00 pm August consumer credit (+$7.0B)
10:00 ISM took some of the bullishness away from early activity in the bond market and stopped selling in equity markets. Still not much investing in equities, just traders moving the indexes in huge wide ranges. Technically the 10 yr and mortgages held key technical bullish levels last week. The rest of the day will be, as usual these days, will be watching stock indexes and any news out of Europe.
At 10:15 the bond and mortgage markets were -6/32 (.18 bp) frm 9:30.
Equity Investment Capital
Office: 949-891-0067
Email: tony@equityinvestmentcapital.com
website: www.equityinvestmentcapital.com
Building Strong, Lasting Relationships; One Client at a Time.
Monday, October 03, 2011
The bond and mortgage markets started nicely this morning with early trading in stock index futures were pointing to a weaker open at 9:30. Friday the bond market held its key supports then rallied as the stock market basis the DJIA dropped 240 points. Stock indexes still quite volatile and likely will remain that way for a long time as investors and traders try to make a buck with high frequency trading.
The economy is declining yet there are those that believe these are buying opportunities for that "in the long run" investments----most that espouse that view are Wall Street firms that make money on investor buying. Greece failed its austerity tests the the EU, IMF and the ECB demanded but the EU isn't ready to let Greece fail yet, only a matter of time though it will. Its time to cut the country loose and let it fail. For months global markets and economies have been focusing on Greece and what European leaders will do. Europe's banks don't want to take loses, unfortunately for them there isn't any choice in the end.
This week has a lot of economic releases but the key is Friday's employment report. Euro-area finance chiefs will meet today in Luxembourg to weigh the threat of a Greek default, grapple with how to shield banks from the fallout and consider a further boost to the rescue fund. A much-needed “liquidity backstop” for the region must come from governments because the European Central Bank’s mandate requires it to keep purchases of sovereign debt extremely limited.
At 9:30 the DJIA opened -30, NASDAQ -12, S&P -4; the 10 yr note +15/32 to 1.87% -5 bp, mortgage prices on 30s +13/32 (.41 bp).
At 10:00 this morning Sept ISM manufacturing index expected at 50.5 frm 50.6, increased to 51.6; new orders component unchanged at 49.6, prices pd at 56.0 frm 55.5 and employment at 53.8 frm 51.8. The initial reaction to the better data turned stock indexes from -89 on the DJIA to -25, the 10 yr note traded +198/32 prior to 10:00 but generally held as safety trades being put back on with Greece unable to meet the goals for more funds.
Also at 10:00 August construction spending expected own -0.5%, as reported spending increased 1.4%.
This Week's Economic Calendar:
Monday;
10:00 am Sept ISM manufacturing index (as reported 51.6)
August construction spending (as reported +1.4%)
3:00 pm Sept auto and truck sales (autos 4.1 mil, trucks +5.5 mil)
Tuesday;
10:00 am August factory orders (-0.1%)
Wednesday;
7:00 am MBA weekly mortgage applications
8:15 am ADP private jobs for Sept (+45K)
10:00 am ISM Sept services sector index (52.8 frm 53.3)
Thursday;
8:30 weekly jobless claims (+11K to 402K)
Friday;
8:30 Sept employment data (non-farm jobs +60K, non-farm private jobs +83K, unemployment rate unch at 9.1%)
10:00 am August wholesale inventories +0.5%)
3:00 pm August consumer credit (+$7.0B)
10:00 ISM took some of the bullishness away from early activity in the bond market and stopped selling in equity markets. Still not much investing in equities, just traders moving the indexes in huge wide ranges. Technically the 10 yr and mortgages held key technical bullish levels last week. The rest of the day will be, as usual these days, will be watching stock indexes and any news out of Europe.
At 10:15 the bond and mortgage markets were -6/32 (.18 bp) frm 9:30.
Sunday, October 2, 2011
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