Archive for the 'Monday Money Market Recap & Forecast' Category

Money Market Recap and Forecast

July 26th, 2010

Written by Frost Mortgage

In spite of the U.S. Homebuilders confidence index falling to 14 from 16 — the lowest it’s been since April 2009 — last Monday was a tough one for U.S. Treasuries.  The prospect of upbeat earnings sent stocks up and money left bonds, but they made up for it on Tuesday.

The report on housing starts and building permits for June came in far below forecasts.  Starts fell 5.0% to an annual rate of 549,000 — the lowest in eight months.  Building permits actually rose 2.1% due to a 20% surge for multi-family units.  But single family permits plunged 3.4% to an annual rate of 421,000 — the worst since April 2009.

This kept buying in Treasuries heavy in the morning, but Wall Street recovered from an early pounding, taking some allure from bonds.  Nevertheless, the 10-year yield, which moves inversely to price, closed at 2.93%.

Fed Chairman Ben Bernanke’s testimony on monetary policy before Congress on Wednesday ignited strong buying in bonds.  His glum assessment of the economy included phrases stating that risks for growth are “weighted to the downside,” financial conditions are better but “less supportive of economic growth,” and his use of the term “unusually uncertain” to describe the economy kept bond pits active.

Thursday’s reports should have supported buying in Treasuries, but they couldn’t compete with a 200-point gain in the Dow Jones.  First-time jobless claims for the week ended July 17 rose by a stronger-than-forecast 37,000 to 464,000. 

Existing home sales in June fell by 5.1% to an annual rate of 5.37 million units from 5.66 million in May.  These numbers, however, beat expectations, which made them acceptable to Wall Street.  There was good news; year-over-year sales rose 9.8%, but so did inventories.  They climbed 2.5% to an 8.9-month supply.

Separately, the index of leading economic indicators, which assesses economic conditions six to nine months ahead, fell by a weaker-than-expected 0.2% versus May’s 0.5% gain.  This report is not much of a market mover.

There were no reports released Friday.  Treasuries opened under slight selling pressure, while Wall Street was mixed but holding close to unchanged.

The Mortgage Bankers Association finally had some good news.  For the week ended July 16, refinances were up 8.6%, the highest the index has been since May 2009.  And purchase apps rose 3.4%, with the MBA citing the drop in mortgage rates as responsible for the increases.

This week has at least one influential report scheduled every day, beginning with new home sales on Monday.  Analysts are expecting sales for June to have risen to an annual rate of 325,000 units — up from 300,000.

Tuesday the Conference Board releases its consumer confidence index for July.  It is expected to continue its recent slide to 51.5 from 52.9.  This is good news for bonds, as worried consumers do not spend.

Durable goods orders for June is out Wednesday, and it’s expected to show a big improvement.  Forecasters have it rising 1.25% from May’s 0.6% decline.  In the afternoon the Fed beige book, which looks at economic conditions in the nation’s 12 federal districts, will be released.  An improving picture has been known to cause selling in bonds, while slow or no growth could ignite buying.  Only the Fed knows which way it will go.

Three economic releases Friday could influence trading.  First, we get the advance look at 2^ndquarter GDP.  It’s expected to show economic growth at 2.5%, which would be slightly below the 1^stquarter’s 2.7% final.  But the advance number is subject to two revisions, which could change the outcome — or not.

The Chicago PMI index on July manufacturing conditions is also predicted to fall.  Economists see it dropping to 57.9 from 59.1.  Any number over 50, however, indicates sector expansion.

The economic seers are expecting the final July consumer sentiment survey from the University of Michigan to rebound — a little.  Two weeks ago it fell to an all-time low of 66.5.  They see it rising to 67.5, which could put slight selling pressure on Treasuries.

With more earnings reports due out next week, there’s no way to tell what effect they will have on bonds.  But they will wield influence — one way or the other.

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Money Market Recap & Forecast from the Daily Communicator: June 21, 2010

June 21st, 2010

Written by Frost Mortgage

Last week was mixed for U.S. Treasuries. A combination of friendly economic reports, lingering questions about the global economy and mixed messages regarding Spain’s financial situation kept buying in government debt steady to strong.
But there were a few bumps. On Monday a big rise in the euro took its toll on Treasuries.

On Tuesday the NY Empire State index of June manufacturing conditions rose to 19.57 from 19.11, but analysts expected 20. Separately, the sentiment survey of residential homebuilders in June fell to 17 from 22 — the lowest since March. These reports should have helped Treasuries, but a massive rally on Wall Street due to the increase in the euro left Treasuries in the dust.

Treasuries turned it around on Wednesday. It began with a huge drop in May housing starts. They fell 10% to an annual rate of 593,000 units from 659,000, and building permits slipped 5.9% from April.

If you’re interested in reading the entire report, published every day and packed with valuable information you can use in your business from mortgage industry leader Greg Frost, please visit The Daily Communicator: http://www.thedailycommunicator.com/

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Money Market Recap & Forecast from the Daily Communicator

June 14th, 2010

Written by Frost Mortgage

Although there was little economic news to influence traders early in the week, the benchmark 10-year note started out strong. The continued decline of the euro pushed stock prices down on concerns about its effect on the global economy. The rush to the safe haven of U.S. Treasuries continued.

The 10-year yield, which moves inversely to price, closed at 3.15% and stayed in that area until Thursday.

Wednesday’s Fed beige book release showed signs of economic improvement in the nation’s 12 federal districts, which provoked light selling. But the report stated that economic growth was mild, slowed by the Gulf oil spill and the economic situation in Europe.

Treasuries were hit Thursday. First-time jobless claims for the week ended June 5 fell by 3,000 to 459,000, and the four-week average rose to 463,000.

If you’re interested in reading the entire report, published every day and packed with valuable information you can use in your business from mortgage industry leader Greg Frost, please visit The Daily Communicator: http://www.thedailycommunicator.com/

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Money Market Recap & Forecast from the Daily Communicator

June 7th, 2010

Written by Frost Mortgage

Compared to the past few weeks, last week was uneventful — until Friday. Although concerns about economic growth here and abroad remain, and trouble spots in the Far East lurk, U.S. Treasuries held steady. The yield on the benchmark 10-year note, which moves inversely to price, barely moved during the first three days of the trading week. It rose only three basis points.

Then the employment numbers for May were released. Although a total of 431,000 jobs were added to nonfarm payrolls, 411,000 are temporary census workers leaving a gain of only 20,000 private sector jobs. And the unemployment rate dropped to 9.7%, but that number is also a questionable one because 322,000 dropped out of the labor market. Buying in Treasuries was fast-paced, dropping the 10-year yield to 3.24 from 3.33, before the opening bell.

The short week began with Tuesday’s release of the ISM index on May manufacturing conditions which fell to 59.7 from 60.4. There was, however, a big gain in employment. Construction spending in April beat expectations by a wide margin. Spending rose 2.7% when a 0.1% increase was predicted. In March, spending rose 0.4%.

If you’re interested in reading the entire report, published every day and packed with valuable information you can use in your business from mortgage industry leader Greg Frost, please visit The Daily Communicator: http://www.thedailycommunicator.com/

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Money Market Recap & Forecast from the Daily Communicator

May 24th, 2010

Written by Frost Mortgage

Last week was brutal for stocks, so bonds had a great run. The debt crisis in Europe and the swift decline of the euro had a debilitating effect on investor confidence, and the flight to safety was on.

For the week, the yield on the benchmark 10-year note, which moves inversely to price, dropped about 20 basis points as of early Friday. The economic news, which was mostly supportive of bonds, took a back seat to global concerns.

News regarding housing starts and building permits for April was mixed, with starts climbing 5.8% to an annual rate of 672,000 units — an 18-month high. Permits, however, plunged 11.5% to an annual rate of 606,000 — a six-month low, while permits for single-family homes fell 10.7%.

Perhaps the best news was from the producer and consumer price indexes which showed no signs of inflation.

If you’re interested in reading the entire report, published every day and packed with valuable information you can use in your business from mortgage industry leader Greg Frost, please visit The Daily Communicator: http://www.thedailycommunicator.com/

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Money Market Recap & Forecast from the Daily Communicator

May 17th, 2010

Written by Frost Mortgage

Last week stocks and bonds recovered from the huge swings of the week before. Although some volatility remains due to Europe’s ongoing saga of financial woes, after Monday’s Wall Street rebound and the big sell-off in bonds, the rest of the week was relatively uneventful.

Although the $1 trillion European rescue package was well-received, global debt problems are not a done deal. Worries persist. There’s a lot of uncertainty about what lies ahead and after the big market moves, questions remain. Was the bailout enough? The answers change daily.

Tuesday’s report had little effect on trading. Wholesale inventories for March rose 0.4% — lower than February’s 0.6% increase and below expectations.

On Wednesday news of a narrower-than-expected trade deficit — $40.4 billion — gave stocks a boost, as did growing confidence that the bailout in Europe would succeed.

If you’re interested in reading the entire report, published every day and packed with valuable information you can use in your business from mortgage industry leader Greg Frost, please visit The Daily Communicator: http://www.thedailycommunicator.com/

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Money Market Recap & Forecast from the Daily Communicator

May 10th, 2010

Written by Frost Mortgage

The week began badly for U.S. Treasury securities, but the benchmark 10-year note did a major U-turn on Tuesday sending it plunging from Monday’s close of 3.70% to 3.39% on Thursday. Yields and prices move in opposite directions.

Monday’s problems were twofold. The proposed Greek bailout by the EU and the IMF dried up safe-haven buying in bonds, which had been keeping yields low. In addition, a trio of good economic releases added to selling pressure.

Consumer spending in March increased for the sixth straight month, rising 0.5%. This pushed it past the pre-recession high reached in November, 2007. Purchases of autos and durable goods led demand, while income rose only 0.2% and the savings rate fell 2.7%.

If you’re interested in reading the entire report, published every day and packed with valuable information you can use in your business from mortgage industry leader Greg Frost, please visit The Daily Communicator: http://www.thedailycommunicator.com/

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Money Market Recap & Forecast from the Daily Communicator

May 3rd, 2010

Written by Frost Mortgage

Money flew into U.S. Treasuries on Tuesday after Standard & Poors downgraded Greece’s debt to “junk” status. Later Portugal also suffered a downgrade. Buying was furious as investors sought the safety of Treasuries and the 10-year note yield, which moves inversely to price, tumbled by 10 basis points.

The day began differently, as consumer confidence in April jumped to a higher-than-expected 57.9 from 52.3. A big increase in “future expectations” was responsible for the big number.

The Fed statement released Wednesday afternoon surprised no one. The post-meeting announcement retained the words “extended period,” referring to the question of how long rates would remain at rock-bottom levels. The rationale is that businesses need to borrow cheap money to hire and make capital investments.

If you’re interested in reading the entire report, published every day and packed with valuable information you can use in your business from mortgage industry leader Greg Frost, please visit The Daily Communicator: http://www.thedailycommunicator.com/

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Money Market Recap & Forecast from the Daily Communicator

April 26th, 2010

Written by Frost Mortgage

U.S. Treasuries had a decent week, thanks to on-and-off debt problems in Greece. When a resolution seemed near, Treasuries sold, but when plans disintegrated, the flight to quality was on, driving prices up and yields, which move inversely to price, down.

Until Friday, scant economic reports had a minimal effect on Treasuries, which thrived on Wednesday as worries about Greek debt flared up. But word that Greece acquired emergency loans cooled buying.

Monday saw mild carryover from the previous Friday’s SEC charges against Goldman Sachs. Traders are awaiting news of any Wall Street reform, which, if passed, would likely benefit bonds.

The only report showed the index of leading economic indicators rose by a strong 1.4% in March, further indicating recovery is underway, but market momentum didn’t shift.

If you’re interested in reading the entire report, published every day and packed with valuable information you can use in your business from mortgage industry leader Greg Frost, please visit The Daily Communicator: http://www.thedailycommunicator.com/

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Money Market Recap & Forecast from the Daily Communicator

April 19th, 2010

Written by Frost Mortgage

Considering the flood of economic reports released last week, the yield on the benchmark 10-year note held steady. But when the SEC leveled fraud changes on Goldman Sachs Friday morning, stocks tumbled and money headed for the safety of Treasuries. The yield on the 10-year note fell to 3.77% — close to a three-week low.

Earnings season began Monday, and it will affect bonds. Cautious corporate forecasts should keep investors in Treasuries, but favorable outlooks could set a path for economic recovery and riskier investments, leaving bonds in the dust. Early earnings reports were mostly impressive.

February’s U.S. trade deficit widened to $39.7 billion, with imports growing faster than exports. Tuesday’s report, however, showed prices were under control.

If you’re interested in reading the entire report, published every day and packed with valuable information you can use in your business from mortgage industry leader Greg Frost, please visit The Daily Communicator: http://www.thedailycommunicator.com/

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