Rate markets opened better this morning with the stock index futures trading weaker. At 8:30, the 10 yr note +12/32 3.44% -4 BP, mortgage prices +6/32 and the DJIA -57. Global stock markets were weak as many currently are re-thinking the levels to which global stocks have risen in the face of what will be considered a slow economic recovery. It is on again, off again with the equity markets; one day it’s pedal to the metal, the next it’s bullish, but maybe too much too soon. So far there has been no sustained selling in the US; on any dips buying cuts off declines. At 9:00 the DJIA -57, 10 yr note +11/32 and mortgage prices +7/32. At 9:30 the DJIA opened -68. the 10 yr +11/32 and mortgage prices +6/32.
At 10:00 this morning August leading economic indicators, expected to be +0.7%, were +0.9%, July LEI revised to +0.9% frm +0.6%;the 5th straight month LEI has increased; LEI is a read that provides the economic outlook six months out and is a compilation of six other data reports. Generally, LEI has little direct impact on the bond and stock markets unless it is well off estimates.
The MSCI World Index is trading at its highest valuation since back in 2003; an increasing concern that the equity markets have overrun themselves based on the economic outlook over the next year. The MSCI World measure is valued at 27.7 times profit, the most expensive level since June 2003. The Dow Jones Stoxx 600 Index of European shares slipped for a second day, losing 1.1%. A 55% increase since March 9 has driven valuations on the gauge to 47.4 times reported profit, also the highest level since June 2003. Markets have been here before, looking for a pullback, in each instance when concern has increased for a pullback it has lasted less than three days before new buying pushed key indexes to another new high on the current run up.
Once again, the bellwether 10 yr note has successfully held its key and significant support at the 3.50% area (Friday’s close 3.48%); A week ago last Friday (9/11) the 10 yr note tested its key support at 3.38% but couldn’t hold it, last week the 10 yr moved back to the support levels. This morning the 10 yr has held again on the weaker open in the stock market, but with supply and the FOMC meeting this week we don’t expect rate markets will improve much until at least Wednesday afternoon and only then if investors increase selling and profit-taking on stocks.
Market Minute information for September 21, 2009 provided by:
Patsy Bailey
Mortgage Banker
Plaza Estate Mortgage
4801 Lang Ave NE Suite 100
Albuquerque, NM 87109
4001 Office Court Ste 603
Sante Fe, NM 87507
Cell: 505.715.3231
Office: 505.473.4045 ext.109
E-mail: patsybailey13@gmail.com
For more information on home financing, visit my Albuquerque Mortgage Page.
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