Mortgage Rate Update!! Improvement!
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Thursday, January 13, 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.
Thursday, January 13, 2011
Markets got three data points at 8:30 this morning. Weekly jobless claims were expected to have declined 4K, claims increased 35K to 445K the largest increase in 6 months and back over the pivotal 400K level. After three weeks of declining claims reality is back, the holiday shortened week likely caused the recent declines. Continuing claims however are continuing to decline as unemployment insurance runs out; continuing claims fell to 3.879 mil frm 4.127 mil last week. Dec PPI jumped 1.1% against forecasts of an increase of 0.8%; excluding food and energy components up 0.2% in line with estimates. The Nov trade deficit was slightly better than expected at -$38.3B with estimates at -$41.2B. Businesses are benefiting from growing demand abroad and a lower dollar that is making American goods more competitive, propelling a factory-led economic recovery. The gain in exports exceeded an increase in imports that mainly reflected a price-driven surge in purchases of crude oil.
The market reaction to the data didn't move markets; at 9:00 the 10 yr note unchanged and mortgage prices also generally unchanged. Stock indexes in futures markets were lower, the DJIA at 9:00 down 16 points. Overall not much initial reaction to the data this morning. Mortgage prices held slight improvements at 9:15 while the 10 yr treasury note hovered close to unchanged. Mortgage markets from a technical perspective are performing better than the bellwether 10 yr note over the last three sessions, nevertheless still with little directional changes recently.
The ECB met and left its benchmark rate unchanged at 1.0%. ECB's Trichet said inflation pressures in the euro region have picked up, while signaling that policy makers have no immediate plans to raise interest rates. The euro currency is strengthening against the dollar on renewed belief that when Europe's finance ministers meet next week they may increase the size of aid reserves and lower rates on bailout loans. Yesterday Spain sold notes with strong demand, about a 2.1 bid/cover ratio; the rate was higher than in their Nov sale however.
At 1:00 this afternoon Treasury will auction $13B of 30 yr bonds, yesterday's 10 yr note auction was a good one.
The stock market opened at 9:30 with the DJIA off 13 points, the 10 yr note -2/32 and mortgages unchanged (+0.03 bp).
Bernanke is scheduled to speak at 1:00 at the FDIC on small business lending, likely nothing that will move markets.
Estimates for 2011 consumer spending continue to be ratcheted higher; in Dec most economists were saying consumer spending this year would increase 2.6% now the consensus is at +3.0% increase. The optimism for this year is gaining momentum yet we remain unconvinced and as stated previously we want to see consumer spending data for Jan that will not be reported until next month. Food prices will increase substantially this year as will oil prices; how will consumers react to higher base spending costs?
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, January 13, 2011
Markets got three data points at 8:30 this morning. Weekly jobless claims were expected to have declined 4K, claims increased 35K to 445K the largest increase in 6 months and back over the pivotal 400K level. After three weeks of declining claims reality is back, the holiday shortened week likely caused the recent declines. Continuing claims however are continuing to decline as unemployment insurance runs out; continuing claims fell to 3.879 mil frm 4.127 mil last week. Dec PPI jumped 1.1% against forecasts of an increase of 0.8%; excluding food and energy components up 0.2% in line with estimates. The Nov trade deficit was slightly better than expected at -$38.3B with estimates at -$41.2B. Businesses are benefiting from growing demand abroad and a lower dollar that is making American goods more competitive, propelling a factory-led economic recovery. The gain in exports exceeded an increase in imports that mainly reflected a price-driven surge in purchases of crude oil.
The market reaction to the data didn't move markets; at 9:00 the 10 yr note unchanged and mortgage prices also generally unchanged. Stock indexes in futures markets were lower, the DJIA at 9:00 down 16 points. Overall not much initial reaction to the data this morning. Mortgage prices held slight improvements at 9:15 while the 10 yr treasury note hovered close to unchanged. Mortgage markets from a technical perspective are performing better than the bellwether 10 yr note over the last three sessions, nevertheless still with little directional changes recently.
The ECB met and left its benchmark rate unchanged at 1.0%. ECB's Trichet said inflation pressures in the euro region have picked up, while signaling that policy makers have no immediate plans to raise interest rates. The euro currency is strengthening against the dollar on renewed belief that when Europe's finance ministers meet next week they may increase the size of aid reserves and lower rates on bailout loans. Yesterday Spain sold notes with strong demand, about a 2.1 bid/cover ratio; the rate was higher than in their Nov sale however.
At 1:00 this afternoon Treasury will auction $13B of 30 yr bonds, yesterday's 10 yr note auction was a good one.
The stock market opened at 9:30 with the DJIA off 13 points, the 10 yr note -2/32 and mortgages unchanged (+0.03 bp).
Bernanke is scheduled to speak at 1:00 at the FDIC on small business lending, likely nothing that will move markets.
Estimates for 2011 consumer spending continue to be ratcheted higher; in Dec most economists were saying consumer spending this year would increase 2.6% now the consensus is at +3.0% increase. The optimism for this year is gaining momentum yet we remain unconvinced and as stated previously we want to see consumer spending data for Jan that will not be reported until next month. Food prices will increase substantially this year as will oil prices; how will consumers react to higher base spending costs?
Wednesday, January 12, 2011
Morgage Rate Update
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, January 12, 2011
Starting weaker today, after the 10 yr note once again fell to 3.28% on Monday yesterday selling put the yield back to 3.34%. The 10 is well defined now in a 20+ basis point range, on any rallies in the past month it finds heavy resistance at 3.28%/3.29% level (five times) and moves back up. This morning at 9:00 the 10 yr rate at 3.40%, moving back toward 3.50%. Mortgages this morning, following the 10 yr note, lower in price; down 9/32 (.28 bp). The stock index futures adding pressure in rate markets with key indexes early pointing to a strong opening at 9:30. At 9:30 the DJIA opened +60 points.
This afternoon's $21B 10 yr note auction and the stronger stock market this morning will likely keep the note and mortgages in check until the results of the auction are reported at 1:00. A good auction should support the note, a weak one will add more selling but will still keep the note and mortgages in their respective trading ranges.
Dec import prices were +1.1% about in line with estimates, non petroleum import prices up 0.4%; yr/yr import prices increased 4.8%, non petro +2.7%. Export prices were up 0.7% right on forecasts; yr/yr +6.5%, a record increase. No reaction to the data, it rarely gets much.
The weekly MBA mortgage applications index up 2.2% last week; the purchase index did decline 3.7% but re-fi index was up 4.9%. The average rate on a 30-year fixed loan dropped to 4.78% last week from 4.82% the prior week. The rate reached 4.21% in October, the lowest since the group’s records began in 1990. At the current 30-year rate, monthly payments for each $100,000 of a loan would be $523.46, or about $21 less than the same week the prior year, when the rate was 5.13%. The average rate on a 15-year fixed mortgage declined to 4.15%, from 4.23%. The rates include a 1.00% origination fee for 80% loans. The share of applicants seeking to refinance a loan rose to 72.1% last week from 71% the prior week.
The Fed's Beige Book will be released at 2:00; markets like it because of its detail but in terms of overall assessments on the economy nothing new is expected.
Later this afternoon at 2:00 Treasury will report the Dec budget balance, normally Dec has a surplus with end of yr tax payments. This Dec the budget is expected at a deficit of $80.0B. No market reaction is expected.
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, January 12, 2011
Starting weaker today, after the 10 yr note once again fell to 3.28% on Monday yesterday selling put the yield back to 3.34%. The 10 is well defined now in a 20+ basis point range, on any rallies in the past month it finds heavy resistance at 3.28%/3.29% level (five times) and moves back up. This morning at 9:00 the 10 yr rate at 3.40%, moving back toward 3.50%. Mortgages this morning, following the 10 yr note, lower in price; down 9/32 (.28 bp). The stock index futures adding pressure in rate markets with key indexes early pointing to a strong opening at 9:30. At 9:30 the DJIA opened +60 points.
This afternoon's $21B 10 yr note auction and the stronger stock market this morning will likely keep the note and mortgages in check until the results of the auction are reported at 1:00. A good auction should support the note, a weak one will add more selling but will still keep the note and mortgages in their respective trading ranges.
Dec import prices were +1.1% about in line with estimates, non petroleum import prices up 0.4%; yr/yr import prices increased 4.8%, non petro +2.7%. Export prices were up 0.7% right on forecasts; yr/yr +6.5%, a record increase. No reaction to the data, it rarely gets much.
The weekly MBA mortgage applications index up 2.2% last week; the purchase index did decline 3.7% but re-fi index was up 4.9%. The average rate on a 30-year fixed loan dropped to 4.78% last week from 4.82% the prior week. The rate reached 4.21% in October, the lowest since the group’s records began in 1990. At the current 30-year rate, monthly payments for each $100,000 of a loan would be $523.46, or about $21 less than the same week the prior year, when the rate was 5.13%. The average rate on a 15-year fixed mortgage declined to 4.15%, from 4.23%. The rates include a 1.00% origination fee for 80% loans. The share of applicants seeking to refinance a loan rose to 72.1% last week from 71% the prior week.
The Fed's Beige Book will be released at 2:00; markets like it because of its detail but in terms of overall assessments on the economy nothing new is expected.
Later this afternoon at 2:00 Treasury will report the Dec budget balance, normally Dec has a surplus with end of yr tax payments. This Dec the budget is expected at a deficit of $80.0B. No market reaction is expected.
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.
Wednesday, January 12, 2011
Starting weaker today, after the 10 yr note once again fell to 3.28% on Monday yesterday selling put the yield back to 3.34%. The 10 is well defined now in a 20+ basis point range, on any rallies in the past month it finds heavy resistance at 3.28%/3.29% level (five times) and moves back up. This morning at 9:00 the 10 yr rate at 3.40%, moving back toward 3.50%. Mortgages this morning, following the 10 yr note, lower in price; down 9/32 (.28 bp). The stock index futures adding pressure in rate markets with key indexes early pointing to a strong opening at 9:30. At 9:30 the DJIA opened +60 points.
This afternoon's $21B 10 yr note auction and the stronger stock market this morning will likely keep the note and mortgages in check until the results of the auction are reported at 1:00. A good auction should support the note, a weak one will add more selling but will still keep the note and mortgages in their respective trading ranges.
Dec import prices were +1.1% about in line with estimates, non petroleum import prices up 0.4%; yr/yr import prices increased 4.8%, non petro +2.7%. Export prices were up 0.7% right on forecasts; yr/yr +6.5%, a record increase. No reaction to the data, it rarely gets much.
The weekly MBA mortgage applications index up 2.2% last week; the purchase index did decline 3.7% but re-fi index was up 4.9%. The average rate on a 30-year fixed loan dropped to 4.78% last week from 4.82% the prior week. The rate reached 4.21% in October, the lowest since the group’s records began in 1990. At the current 30-year rate, monthly payments for each $100,000 of a loan would be $523.46, or about $21 less than the same week the prior year, when the rate was 5.13%. The average rate on a 15-year fixed mortgage declined to 4.15%, from 4.23%. The rates include a 1.00% origination fee for 80% loans. The share of applicants seeking to refinance a loan rose to 72.1% last week from 71% the prior week.
The Fed's Beige Book will be released at 2:00; markets like it because of its detail but in terms of overall assessments on the economy nothing new is expected.
Later this afternoon at 2:00 Treasury will report the Dec budget balance, normally Dec has a surplus with end of yr tax payments. This Dec the budget is expected at a deficit of $80.0B. No market reaction is expected.
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, January 12, 2011
Starting weaker today, after the 10 yr note once again fell to 3.28% on Monday yesterday selling put the yield back to 3.34%. The 10 is well defined now in a 20+ basis point range, on any rallies in the past month it finds heavy resistance at 3.28%/3.29% level (five times) and moves back up. This morning at 9:00 the 10 yr rate at 3.40%, moving back toward 3.50%. Mortgages this morning, following the 10 yr note, lower in price; down 9/32 (.28 bp). The stock index futures adding pressure in rate markets with key indexes early pointing to a strong opening at 9:30. At 9:30 the DJIA opened +60 points.
This afternoon's $21B 10 yr note auction and the stronger stock market this morning will likely keep the note and mortgages in check until the results of the auction are reported at 1:00. A good auction should support the note, a weak one will add more selling but will still keep the note and mortgages in their respective trading ranges.
Dec import prices were +1.1% about in line with estimates, non petroleum import prices up 0.4%; yr/yr import prices increased 4.8%, non petro +2.7%. Export prices were up 0.7% right on forecasts; yr/yr +6.5%, a record increase. No reaction to the data, it rarely gets much.
The weekly MBA mortgage applications index up 2.2% last week; the purchase index did decline 3.7% but re-fi index was up 4.9%. The average rate on a 30-year fixed loan dropped to 4.78% last week from 4.82% the prior week. The rate reached 4.21% in October, the lowest since the group’s records began in 1990. At the current 30-year rate, monthly payments for each $100,000 of a loan would be $523.46, or about $21 less than the same week the prior year, when the rate was 5.13%. The average rate on a 15-year fixed mortgage declined to 4.15%, from 4.23%. The rates include a 1.00% origination fee for 80% loans. The share of applicants seeking to refinance a loan rose to 72.1% last week from 71% the prior week.
The Fed's Beige Book will be released at 2:00; markets like it because of its detail but in terms of overall assessments on the economy nothing new is expected.
Later this afternoon at 2:00 Treasury will report the Dec budget balance, normally Dec has a surplus with end of yr tax payments. This Dec the budget is expected at a deficit of $80.0B. No market reaction is expected.
Tuesday, January 11, 2011
Mortgage Rate Update
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, January 11, 2011
The rate markets started quiet and about unchanged this morning after a nice move technically yesterday for the bellwether 10 yr note. The note yield closed under its 20 day moving average and the 9 day RSI moved below 50 to 48, the first time the RSI index is below 50 (bullish) since mid-Nov, good but not good enough yet. For over a month on any improvement in its yield the 10 yr note has run into a wall at 3.28%, that occurred yesterday and this morning the 10 yr at 9:30 at 3.31%. Mortgage prices unchanged at 9:00 this morning. No direct news for the markets overnight; Japan announced it would join China in buying debt issues in Europe to assist in the sovereign debt problems that continue to plague the region.
Japan will buy bonds issued by Europe’s financial-aid funds, Finance Minister Yoshihiko Noda said in Tokyo today, joining China in signaling support for the region as Portugal, Spain and Italy prepare to sell debt this week. China’s foreign- exchange reserves jumped by a record last quarter to $2.85 trillion, the central bank said today. The announcement improved Europe's stock markets and supported US stock index futures in pre-market trading.
Somewhat of a negative this morning for the economic outlook; the National Federation of Independent Business index of sentiment of small businesses fell for the first time in six months, down 0.6%. For six months the index had been very slowly improving. According to Wm Dunkelberg, chief economist for the group small businesses are reluctant to spend and hire until they have more evidence consumers will increase spending; the view we have had and continue to have. As we have noted previously, we want to see Jan data before we commit to the current consensus that the US growth in 2011 will meet the 4.0% GDP forecast that has driven equity markets higher. The NFIB monthly report didn't hurt the stock market, the DJIA opened +57 this morning.
The only economic data today, at 10:00 Nov wholesale inventories, expected up 1.0%, were down 0.2%. Oct revised from +0.9% to +1.7%. Nov sales +1.9% with the inventory to sales ratio 1.15 months from +1.17 months in Oct. No initial reaction to the data.
At 1:00 this afternoon Treasury will auction $32B of 3 yr notes; two weeks ago the 2 yr note auction met with soft demand. Likely the bond and mortgage markets will be quiet until the auction results hit.
The Fed will be buying treasuries with matures between 2016 and 2017 today as part of the $600B QE 2, not a big deal though.
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, January 11, 2011
The rate markets started quiet and about unchanged this morning after a nice move technically yesterday for the bellwether 10 yr note. The note yield closed under its 20 day moving average and the 9 day RSI moved below 50 to 48, the first time the RSI index is below 50 (bullish) since mid-Nov, good but not good enough yet. For over a month on any improvement in its yield the 10 yr note has run into a wall at 3.28%, that occurred yesterday and this morning the 10 yr at 9:30 at 3.31%. Mortgage prices unchanged at 9:00 this morning. No direct news for the markets overnight; Japan announced it would join China in buying debt issues in Europe to assist in the sovereign debt problems that continue to plague the region.
Japan will buy bonds issued by Europe’s financial-aid funds, Finance Minister Yoshihiko Noda said in Tokyo today, joining China in signaling support for the region as Portugal, Spain and Italy prepare to sell debt this week. China’s foreign- exchange reserves jumped by a record last quarter to $2.85 trillion, the central bank said today. The announcement improved Europe's stock markets and supported US stock index futures in pre-market trading.
Somewhat of a negative this morning for the economic outlook; the National Federation of Independent Business index of sentiment of small businesses fell for the first time in six months, down 0.6%. For six months the index had been very slowly improving. According to Wm Dunkelberg, chief economist for the group small businesses are reluctant to spend and hire until they have more evidence consumers will increase spending; the view we have had and continue to have. As we have noted previously, we want to see Jan data before we commit to the current consensus that the US growth in 2011 will meet the 4.0% GDP forecast that has driven equity markets higher. The NFIB monthly report didn't hurt the stock market, the DJIA opened +57 this morning.
The only economic data today, at 10:00 Nov wholesale inventories, expected up 1.0%, were down 0.2%. Oct revised from +0.9% to +1.7%. Nov sales +1.9% with the inventory to sales ratio 1.15 months from +1.17 months in Oct. No initial reaction to the data.
At 1:00 this afternoon Treasury will auction $32B of 3 yr notes; two weeks ago the 2 yr note auction met with soft demand. Likely the bond and mortgage markets will be quiet until the auction results hit.
The Fed will be buying treasuries with matures between 2016 and 2017 today as part of the $600B QE 2, not a big deal though.
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.
Tuesday, January 11, 2011
The rate markets started quiet and about unchanged this morning after a nice move technically yesterday for the bellwether 10 yr note. The note yield closed under its 20 day moving average and the 9 day RSI moved below 50 to 48, the first time the RSI index is below 50 (bullish) since mid-Nov, good but not good enough yet. For over a month on any improvement in its yield the 10 yr note has run into a wall at 3.28%, that occurred yesterday and this morning the 10 yr at 9:30 at 3.31%. Mortgage prices unchanged at 9:00 this morning. No direct news for the markets overnight; Japan announced it would join China in buying debt issues in Europe to assist in the sovereign debt problems that continue to plague the region.
Japan will buy bonds issued by Europe’s financial-aid funds, Finance Minister Yoshihiko Noda said in Tokyo today, joining China in signaling support for the region as Portugal, Spain and Italy prepare to sell debt this week. China’s foreign- exchange reserves jumped by a record last quarter to $2.85 trillion, the central bank said today. The announcement improved Europe's stock markets and supported US stock index futures in pre-market trading.
Somewhat of a negative this morning for the economic outlook; the National Federation of Independent Business index of sentiment of small businesses fell for the first time in six months, down 0.6%. For six months the index had been very slowly improving. According to Wm Dunkelberg, chief economist for the group small businesses are reluctant to spend and hire until they have more evidence consumers will increase spending; the view we have had and continue to have. As we have noted previously, we want to see Jan data before we commit to the current consensus that the US growth in 2011 will meet the 4.0% GDP forecast that has driven equity markets higher. The NFIB monthly report didn't hurt the stock market, the DJIA opened +57 this morning.
The only economic data today, at 10:00 Nov wholesale inventories, expected up 1.0%, were down 0.2%. Oct revised from +0.9% to +1.7%. Nov sales +1.9% with the inventory to sales ratio 1.15 months from +1.17 months in Oct. No initial reaction to the data.
At 1:00 this afternoon Treasury will auction $32B of 3 yr notes; two weeks ago the 2 yr note auction met with soft demand. Likely the bond and mortgage markets will be quiet until the auction results hit.
The Fed will be buying treasuries with matures between 2016 and 2017 today as part of the $600B QE 2, not a big deal though.
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, January 11, 2011
The rate markets started quiet and about unchanged this morning after a nice move technically yesterday for the bellwether 10 yr note. The note yield closed under its 20 day moving average and the 9 day RSI moved below 50 to 48, the first time the RSI index is below 50 (bullish) since mid-Nov, good but not good enough yet. For over a month on any improvement in its yield the 10 yr note has run into a wall at 3.28%, that occurred yesterday and this morning the 10 yr at 9:30 at 3.31%. Mortgage prices unchanged at 9:00 this morning. No direct news for the markets overnight; Japan announced it would join China in buying debt issues in Europe to assist in the sovereign debt problems that continue to plague the region.
Japan will buy bonds issued by Europe’s financial-aid funds, Finance Minister Yoshihiko Noda said in Tokyo today, joining China in signaling support for the region as Portugal, Spain and Italy prepare to sell debt this week. China’s foreign- exchange reserves jumped by a record last quarter to $2.85 trillion, the central bank said today. The announcement improved Europe's stock markets and supported US stock index futures in pre-market trading.
Somewhat of a negative this morning for the economic outlook; the National Federation of Independent Business index of sentiment of small businesses fell for the first time in six months, down 0.6%. For six months the index had been very slowly improving. According to Wm Dunkelberg, chief economist for the group small businesses are reluctant to spend and hire until they have more evidence consumers will increase spending; the view we have had and continue to have. As we have noted previously, we want to see Jan data before we commit to the current consensus that the US growth in 2011 will meet the 4.0% GDP forecast that has driven equity markets higher. The NFIB monthly report didn't hurt the stock market, the DJIA opened +57 this morning.
The only economic data today, at 10:00 Nov wholesale inventories, expected up 1.0%, were down 0.2%. Oct revised from +0.9% to +1.7%. Nov sales +1.9% with the inventory to sales ratio 1.15 months from +1.17 months in Oct. No initial reaction to the data.
At 1:00 this afternoon Treasury will auction $32B of 3 yr notes; two weeks ago the 2 yr note auction met with soft demand. Likely the bond and mortgage markets will be quiet until the auction results hit.
The Fed will be buying treasuries with matures between 2016 and 2017 today as part of the $600B QE 2, not a big deal though.
Monday, January 10, 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.
Monday, January 10, 2011
Treasuries and mortgages opened a little better this morning with stock index futures trading weaker. There is no data to think about today, most of the key economic reports hit on Thursday and Friday; in the meantime the rate markets will contend with $66B of Treasury auctions beginning Tuesday. Today and tomorrow not much scheduled, in the meantime it is a waiting game and focus on the action in the equity markets that continue to discount the increasing view that the US economy will rebound nicely in 2011.
This Week's Economic Calendar:
Tuesday;
10:00 am Nov wholesale inventories (+0.9%)
1:00 pm $32B 3 yr note auction
Wednesday;
7:00 am Weekly MBA mortgage applications
8:30 Dec import and export prices
1:00 pm $21B 10 yr note auction
2:00 pm Dec Treasury budget balance (-$80.0B)
Fed's Beige Book
Thursday;
8:30 am weekly jobless claims (+6K to 415K; con't claims 4.09 mil from 4.103 mil)
Dec producer price index (+0.8%, ex food and energy +0.2%)
Nov trade balance (-$41.2B)
1:00 pm $13B 30 yr bond auction
Friday;
8:30 am Dec consumer price index (+0.4%; ex food and energy +0.1%)
Dec retail sales (+0.7%, ex auto sales +0.6%)
9:15 am Dec industrial production (+0.4%)
Dec capacity utilization (75.5% frm 75.2%)
9:55 am Jan U. of Michigan consumer sentiment index (75.4 frm 74.5)
10:00 am Nov business inventories (+0.8%)
Concerns about potential inflation have not diminished, just pausing for the moment. That traders have turned attention to other issues like the decline in stock markets today, doesn't alter the global concerns that inflation is about to increase. Likely will get a a toe old in emerging markets first, the Europe and the US. The global economic recovery has been stronger and quicker than had been thought, particularly in emerging markets. In Europe the ECB is sounding the warning bell with commodity prices increasing and food prices escalating rapidly. IN the US we look at inflation without consideration of food and energy prices because historically those areas are considered too volatile; that was then, this is now. We believe food and energy costs are going to continue to increase and spill over to all commodities; that has already started and will continue.
The increase in food and energy prices is a two way street for the rate markets; higher food and energy will slow consumer discretionary spending lessening any chance retailers and goods producers will be able to increase prices as consumers slow spending. That however won't hold prices down much longer for other consumer goods, so far producers and retailers have not passed along increases, they simply are cutting back quantities and sizes to offset their price increases. Sooner rather than later those increases will work down the chain to consumers and will send interest rates higher. The caveat, and there always is one, if consumers don't meet current market expectations the economic outlook will weaken and if it does inflation worries will go back in the box and rates will stay historically low.
Technically the 10 yr and mortgages still have slightly bearish tones but slowly that may be changing. If the 10 yr note can clear 3.25% it will likely have a run to 3.00%. The MBS markets are in slightly better technical position but won't launch anything significant until the 10 yr makes its move. The 2011 economic outlook is improving, however skepticism still hangs over markets.
Most every global stock market traded weaker today, Europe still weak. Asian emerging markets took the biggest hits on increasing fears of inflation on exceptionally strong growth. The US equity markets opened weak and getting weaker as the day moves along. Interest rates benefiting on weaker global equities. Crude higher on the closure of the Alaska pipeline due to a leak at a pumping station.
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, January 10, 2011
Treasuries and mortgages opened a little better this morning with stock index futures trading weaker. There is no data to think about today, most of the key economic reports hit on Thursday and Friday; in the meantime the rate markets will contend with $66B of Treasury auctions beginning Tuesday. Today and tomorrow not much scheduled, in the meantime it is a waiting game and focus on the action in the equity markets that continue to discount the increasing view that the US economy will rebound nicely in 2011.
This Week's Economic Calendar:
Tuesday;
10:00 am Nov wholesale inventories (+0.9%)
1:00 pm $32B 3 yr note auction
Wednesday;
7:00 am Weekly MBA mortgage applications
8:30 Dec import and export prices
1:00 pm $21B 10 yr note auction
2:00 pm Dec Treasury budget balance (-$80.0B)
Fed's Beige Book
Thursday;
8:30 am weekly jobless claims (+6K to 415K; con't claims 4.09 mil from 4.103 mil)
Dec producer price index (+0.8%, ex food and energy +0.2%)
Nov trade balance (-$41.2B)
1:00 pm $13B 30 yr bond auction
Friday;
8:30 am Dec consumer price index (+0.4%; ex food and energy +0.1%)
Dec retail sales (+0.7%, ex auto sales +0.6%)
9:15 am Dec industrial production (+0.4%)
Dec capacity utilization (75.5% frm 75.2%)
9:55 am Jan U. of Michigan consumer sentiment index (75.4 frm 74.5)
10:00 am Nov business inventories (+0.8%)
Concerns about potential inflation have not diminished, just pausing for the moment. That traders have turned attention to other issues like the decline in stock markets today, doesn't alter the global concerns that inflation is about to increase. Likely will get a a toe old in emerging markets first, the Europe and the US. The global economic recovery has been stronger and quicker than had been thought, particularly in emerging markets. In Europe the ECB is sounding the warning bell with commodity prices increasing and food prices escalating rapidly. IN the US we look at inflation without consideration of food and energy prices because historically those areas are considered too volatile; that was then, this is now. We believe food and energy costs are going to continue to increase and spill over to all commodities; that has already started and will continue.
The increase in food and energy prices is a two way street for the rate markets; higher food and energy will slow consumer discretionary spending lessening any chance retailers and goods producers will be able to increase prices as consumers slow spending. That however won't hold prices down much longer for other consumer goods, so far producers and retailers have not passed along increases, they simply are cutting back quantities and sizes to offset their price increases. Sooner rather than later those increases will work down the chain to consumers and will send interest rates higher. The caveat, and there always is one, if consumers don't meet current market expectations the economic outlook will weaken and if it does inflation worries will go back in the box and rates will stay historically low.
Technically the 10 yr and mortgages still have slightly bearish tones but slowly that may be changing. If the 10 yr note can clear 3.25% it will likely have a run to 3.00%. The MBS markets are in slightly better technical position but won't launch anything significant until the 10 yr makes its move. The 2011 economic outlook is improving, however skepticism still hangs over markets.
Most every global stock market traded weaker today, Europe still weak. Asian emerging markets took the biggest hits on increasing fears of inflation on exceptionally strong growth. The US equity markets opened weak and getting weaker as the day moves along. Interest rates benefiting on weaker global equities. Crude higher on the closure of the Alaska pipeline due to a leak at a pumping station.
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