Ten-year notes and 30-year bonds were little changed on the week after the government sold a combined $27 billion of the securities in quarterly auctions. U.S. mortgage lenders Fannie Mae and Freddie Mac posted bigger-than-expected losses this week, adding to speculation that the Treasury will have to sell more debt if it decides to provide the companies with capital. Traders now see a 33 percent chance that U.S. policy makers will raise interest rates by year-end, compared with a 65 percent likelihood a week ago. Oil touched a three-month low of $117 today, easing concern that inflation will accelerate.
In Europe, speculation also eased that the European Central Bank, whose sole mandate is to control inflation, will raise interest rates as the economy slows. The ECB held its benchmark rate at 4.25 percent yesterday. Its president, Jean-Claude Trichet, said expansion will be ``particularly weak'' in the second and third quarters. U.S. stocks rose, helping the Standard & Poor's 500 Index post the first back-to-back weekly gain since May, as retailers and airlines rallied on speculation lower commodity prices will boost earnings.
Home Depot Inc., Macy's Inc. and Gap Inc. climbed as the dollar's biggest advance against the euro in four years pushed crude oil to a three-month low. General Motors Corp. rallied, while United Airlines parent UAL Corp. jumped almost 10 percent. Fannie Mae dropped after joining Freddie Mac in posting a bigger- than-estimated loss and slashing its dividend.
Showing posts with label 30 year bonds. Show all posts
Showing posts with label 30 year bonds. Show all posts
Friday, August 8, 2008
Thursday, July 31, 2008
Markets Economic News
Treasuries advanced after government reports showed the economy grew at a slower pace in the second quarter than forecast, fueling speculation the Federal Reserve won't raise interest rates this year.
The gains pushed two-year notes to their biggest monthly rally since February after the growth report, which contained revisions that showed the economy may have slipped into recession during the last three months of 2007. Initial claims for unemployment benefits reached the highest level in more than five years. Initial jobless claims increased by 44,000 to 448,000 in the week ended July 26, from a revised 404,000 the prior week, the Labor Department said. Economists had forecast a drop in claims. The total number of people on benefit rolls rose to the most since December 2003.
The bond market still isn't providing investors with enough income to cover the rate of inflation, which rose 5 percent in the year ended June 30, Labor Department data show. The Standard & Poor's 500 Index has dropped 13 percent this year and the dollar declined 4.7 percent against the currencies of six trading partners as U.S. financial institutions posted losses and writedowns totaling $250 billion in the deepest housing recession since the Great Depression.
According to the Kiplinger Letter released yesterday, "California will fare well in the increasingly competitive global economy. Current job and housing troubles are only a pause in a wave of growth that will carry the state in a rising tide of expansion over the next 10 years."
The gains pushed two-year notes to their biggest monthly rally since February after the growth report, which contained revisions that showed the economy may have slipped into recession during the last three months of 2007. Initial claims for unemployment benefits reached the highest level in more than five years. Initial jobless claims increased by 44,000 to 448,000 in the week ended July 26, from a revised 404,000 the prior week, the Labor Department said. Economists had forecast a drop in claims. The total number of people on benefit rolls rose to the most since December 2003.
The bond market still isn't providing investors with enough income to cover the rate of inflation, which rose 5 percent in the year ended June 30, Labor Department data show. The Standard & Poor's 500 Index has dropped 13 percent this year and the dollar declined 4.7 percent against the currencies of six trading partners as U.S. financial institutions posted losses and writedowns totaling $250 billion in the deepest housing recession since the Great Depression.
According to the Kiplinger Letter released yesterday, "California will fare well in the increasingly competitive global economy. Current job and housing troubles are only a pause in a wave of growth that will carry the state in a rising tide of expansion over the next 10 years."
Tuesday, July 22, 2008
Treasuries, Bonds and bail out.
Treasuries fell as Federal Reserve Bank of Philadelphia President Charles Plosser said the central bank should raise interest rates ``sooner rather than later'' and traders prepared for the sale of $58 billion in government debt this week.
Treasury Secretary Henry Paulson's plan to revive U.S. mortgage financing depends on investors buying the same kind of bonds they're shunning in Europe. Paulson wants to create a version of Europe's market for covered bonds in the U.S. just as sales of the debt have fallen to a six-month low and prices have dropped 2.5 percent this year. While the securities are backed by loans and bank assets to get AAA ratings, most are valued, on average, as if they were three levels lower. As I have mentioned before the insurers for these bonds are ll going under. This could be our next crisis.
Developing a U.S. market for the securities is the latest of Paulson's initiatives to revive lending among banks crippled by $452 billion of credit losses and writedowns. His plan for a ``SuperSIV'' to bail out the $400 billion market for structured investment vehicles(What planet is our government from?) failed last year after Wall Street firms rescued the credit funds independently. Both Democratic and Republican senators are looking for changes in the Treasury secretary's proposal this month to shore up home lending by allowing the government to buy stakes in Fannie Mae and Freddie Mac.
Treasury Secretary Henry Paulson's plan to revive U.S. mortgage financing depends on investors buying the same kind of bonds they're shunning in Europe. Paulson wants to create a version of Europe's market for covered bonds in the U.S. just as sales of the debt have fallen to a six-month low and prices have dropped 2.5 percent this year. While the securities are backed by loans and bank assets to get AAA ratings, most are valued, on average, as if they were three levels lower. As I have mentioned before the insurers for these bonds are ll going under. This could be our next crisis.
Developing a U.S. market for the securities is the latest of Paulson's initiatives to revive lending among banks crippled by $452 billion of credit losses and writedowns. His plan for a ``SuperSIV'' to bail out the $400 billion market for structured investment vehicles(What planet is our government from?) failed last year after Wall Street firms rescued the credit funds independently. Both Democratic and Republican senators are looking for changes in the Treasury secretary's proposal this month to shore up home lending by allowing the government to buy stakes in Fannie Mae and Freddie Mac.
Monday, July 21, 2008
Not as bad as thought sparks a small rally
Bank of America, now the biggest U.S. consumer bank and home lender, said second-quarter profit fell less than analysts estimated. BofA said net income declined 41% to $3.41 billion from $5.76 billion a year earlier. That beat estimates.
We still have Wachovia and WaMu earnings ahead of us this week, but four of the nation's five biggest banks have now reported better-than-estimated results, sparking a rally in financial shares.
These are some at risk institutions: Downey Financial, Corus Bankshares, Doral Financial, FirstFed of Santa Monica, Oriental Financial, BankUnited Financial, BFC Financial, First BanCorp, Flagstar Bancorp of Troy, Mich., Santander BanCorp of Puerto Rico, and Washington Mutual Inc. (WM) of Seattle. Read more at http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080721/REG/278316415
The 10-yr bond is up to 4.09%. We have $56 billion in Treasury supply this week (2-yr, 5-yr, and 20-yr Treasury Inflation Protected Securities), but the only data today is Leading Economic Indicators at 7AM PST, expected to show a decrease of 0.1%.
Tomorrow brings the July Richmond manufacturing index, the May house price index, and on Wednesday we'll see the Fed's beige book follow on Wednesday. Thursday brings both weekly initial unemployment claims and June existing home sales. Lastly, Friday brings June durable goods orders, the final-July US consumer confidence report, and June new home sales.
We still have Wachovia and WaMu earnings ahead of us this week, but four of the nation's five biggest banks have now reported better-than-estimated results, sparking a rally in financial shares.
These are some at risk institutions: Downey Financial, Corus Bankshares, Doral Financial, FirstFed of Santa Monica, Oriental Financial, BankUnited Financial, BFC Financial, First BanCorp, Flagstar Bancorp of Troy, Mich., Santander BanCorp of Puerto Rico, and Washington Mutual Inc. (WM) of Seattle. Read more at http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20080721/REG/278316415
The 10-yr bond is up to 4.09%. We have $56 billion in Treasury supply this week (2-yr, 5-yr, and 20-yr Treasury Inflation Protected Securities), but the only data today is Leading Economic Indicators at 7AM PST, expected to show a decrease of 0.1%.
Tomorrow brings the July Richmond manufacturing index, the May house price index, and on Wednesday we'll see the Fed's beige book follow on Wednesday. Thursday brings both weekly initial unemployment claims and June existing home sales. Lastly, Friday brings June durable goods orders, the final-July US consumer confidence report, and June new home sales.
Tuesday, May 13, 2008
Treasuries and Euro
U.S. Treasuries fell, pushing two-year yields to the highest level in a week, as a bigger-than-forecast increase in a measure of retail sales bolstered speculation the Federal Reserve will keep interest rates unchanged next month. Two-year notes led declines as traders bet the Fed's seven rate cuts since September will help the economy emerge from the biggest housing slump since the Great Depression. Import prices rose more than expected last month as the dollar set a record low against the euro.
The yield on the 30-year bond rose 7 basis points to 4.61 percent as oil reached $126.98 a barrel, a record high. Excluding autos, retail sales increased 0.5 percent in April, after a 0.4 percent climb in March, the government said. Futures on the Chicago Board of Trade show a 92 percent chance the Fed will hold its target lending rate at 2 percent on June 25, up from an 86 percent likelihood yesterday. The balance of bets is for a cut of a quarter-percentage point. Traders also see a 43 percent chance the central bank will lift the benchmark rate to 2.25 percent by year-end.
The yield on the 30-year bond rose 7 basis points to 4.61 percent as oil reached $126.98 a barrel, a record high. Excluding autos, retail sales increased 0.5 percent in April, after a 0.4 percent climb in March, the government said. Futures on the Chicago Board of Trade show a 92 percent chance the Fed will hold its target lending rate at 2 percent on June 25, up from an 86 percent likelihood yesterday. The balance of bets is for a cut of a quarter-percentage point. Traders also see a 43 percent chance the central bank will lift the benchmark rate to 2.25 percent by year-end.
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