Creating Wealth for my Family and Friends
Mortgage and Financial Market Recap for Sept 28th 2009
The equity markets continue to look like nothing is going to stop the rally; the bond and mortgage markets are also joining in these days. The 10 yr note is about to test its key resistance at 3.28% that has stopped the decline on its yield three times previously. Mortgages are getting a lift today with news that the Obama Administration is considering pumping another $35B of our tax dollars into mortgage assistance to states and communities; don't know any details, or whether it will happen, but that is the story so far.
The stock market was buoyed today with the announcement from Xerox that it will pay $6.4B to buy Affiliated Computer Services; anytime markets begin to expect mergers and acquisitions it is taken as a positive on the idea money is being spent betting on the economic recovery continuing. The DJIA at one point early this afternoon was up 158 points. Still hearing the mantra that there is a lot of money not yet employed in the stock market, maybe it won't be. Investors have been burned; consumers are essentially broke in terms of declines in wealth (homes) and have lost some of their appetite for anything Wall Street, hard to blame them.
No economic data to look at today; tomorrow not much either. The Case/Shiller housing price index for July at 9:00 is expected to show a decline of 14.2% from a year ago, a little better than in 15.44% decline in June. Any improvement in home valuations is welcome and markets will likely make it even more significant if prices firm up more than estimates. At 10:00 the September consumer confidence index from the Conference Board, expected to improve from 54.1 in August to 57.0.
The 10 yr note is now at its technical resistance level at the 3.28% area (3.29%); last week it flipped and rallied after testing its support at 3.50%. Now at resistance; with more Treasury borrowing on the way next week and the stock market negating last week's key reversal the note may be running out of gas for this run. Near term as long as economic reports continue to improve along with the stock market, we are less willing to press the long side of the rate markets unless 3.28% is decisively taken out.
The longer view for the rate markets is for higher rates based on the universal conviction that economic recovery is here to stay. A couple of primary dealers are calling for the 10 yr note to trade up to 3.70% early next year with the Fed approaching the decision to tighten the FF rate. With rates at these low levels, to continue lower the equity markets must reverse and head down, so far that is about as easy as turning the Mississippi river to flow north.
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PRICES @ 4:00 PM
10 yr note: 102.26 +10/32 3.29% -3 BP
5 yr note: 100.06 +6/32 2.33% -4 BP
2 Yr note: 100.01 +1/32 0.98% -1 BP
30 yr bond: 108.01 +34/32 4.04% -5 BP
Libor Rates: 1 mo; 0.246%; 3 mo 0.282%; 6 mo 0.638%; 1 yr 1.255%
30 yr FNMA 4.5 Nov: 100.30 +6/32 (+6/32 (.18 bp) frm 10:00)
15 yr FNMA 4.0 Nov: 101.14 +5/32 (+5/32 (.15 bp) frm 10:00)
30 yr GNMA 4.5 Nov: 101.05 +5/32 (+5/32 (.15 bp) frm 10:00)
15 yr GNMA 4.0 Nov: 102.06 +7/32 (+7/32 (.21 bp) frm 10:00)
Dollar/Yen: 89.59 -0.05 yen
Dollar/Euro: $1.4614 -$0.0075 (dollar better)
Gold Dec: $991.00 -$0.60
Crude Oil Nov: $67.00 +$0.98
Goldman-Sachs
Commodity Index: 444.65 +3.73
DJIA: 9789.36 +124.17
NASDAQ: 2130.74 +39.82
S&P 500: 1062.98 +18.60
The stock market was buoyed today with the announcement from Xerox that it will pay $6.4B to buy Affiliated Computer Services; anytime markets begin to expect mergers and acquisitions it is taken as a positive on the idea money is being spent betting on the economic recovery continuing. The DJIA at one point early this afternoon was up 158 points. Still hearing the mantra that there is a lot of money not yet employed in the stock market, maybe it won't be. Investors have been burned; consumers are essentially broke in terms of declines in wealth (homes) and have lost some of their appetite for anything Wall Street, hard to blame them.
No economic data to look at today; tomorrow not much either. The Case/Shiller housing price index for July at 9:00 is expected to show a decline of 14.2% from a year ago, a little better than in 15.44% decline in June. Any improvement in home valuations is welcome and markets will likely make it even more significant if prices firm up more than estimates. At 10:00 the September consumer confidence index from the Conference Board, expected to improve from 54.1 in August to 57.0.
The 10 yr note is now at its technical resistance level at the 3.28% area (3.29%); last week it flipped and rallied after testing its support at 3.50%. Now at resistance; with more Treasury borrowing on the way next week and the stock market negating last week's key reversal the note may be running out of gas for this run. Near term as long as economic reports continue to improve along with the stock market, we are less willing to press the long side of the rate markets unless 3.28% is decisively taken out.
The longer view for the rate markets is for higher rates based on the universal conviction that economic recovery is here to stay. A couple of primary dealers are calling for the 10 yr note to trade up to 3.70% early next year with the Fed approaching the decision to tighten the FF rate. With rates at these low levels, to continue lower the equity markets must reverse and head down, so far that is about as easy as turning the Mississippi river to flow north.
________________________________________
PRICES @ 4:00 PM
10 yr note: 102.26 +10/32 3.29% -3 BP
5 yr note: 100.06 +6/32 2.33% -4 BP
2 Yr note: 100.01 +1/32 0.98% -1 BP
30 yr bond: 108.01 +34/32 4.04% -5 BP
Libor Rates: 1 mo; 0.246%; 3 mo 0.282%; 6 mo 0.638%; 1 yr 1.255%
30 yr FNMA 4.5 Nov: 100.30 +6/32 (+6/32 (.18 bp) frm 10:00)
15 yr FNMA 4.0 Nov: 101.14 +5/32 (+5/32 (.15 bp) frm 10:00)
30 yr GNMA 4.5 Nov: 101.05 +5/32 (+5/32 (.15 bp) frm 10:00)
15 yr GNMA 4.0 Nov: 102.06 +7/32 (+7/32 (.21 bp) frm 10:00)
Dollar/Yen: 89.59 -0.05 yen
Dollar/Euro: $1.4614 -$0.0075 (dollar better)
Gold Dec: $991.00 -$0.60
Crude Oil Nov: $67.00 +$0.98
Goldman-Sachs
Commodity Index: 444.65 +3.73
DJIA: 9789.36 +124.17
NASDAQ: 2130.74 +39.82
S&P 500: 1062.98 +18.60
Tags: DOW, Financial, Mortgage, daily, interest, rates, stocks, update
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