At 8:30 the Sept trade balance came with a deficit of $36.47B, about $5B more than expected and the worst monthly deficit in 10 years. Imports of autos and higher oil prices contributed to the increase. The jump in the trade deficit will cause a downward revision to Q3 GDP growth when the preliminary GDP hits on the 24th; originally reported at +3.5% in the advance report. Import prices for Oct were +0.7%, export prices +0.3%; imports increased 5.8% while exports were +2.9%. Nothing in these reports was a surprise; we still import more than we export and that likely won’t change.
Mortgage markets continue to improve early this morning, the 10 yr note however was unchanged through 9:00. The stock indexes traded better early pointing to a better open. Guess why; the dollar is weaker today. Yesterday the dollar had some strength, the DJIA declined and crude oil prices fell over $2.00. At 9:30 the DJIA opened +20, the 10 yr note +4/32 and mortgages +4/32.
The last of the data this week, the mid-month U. of Michigan consumer sentiment index; expected to have improved to 71.8 frm 70.6 at the end of Oct, it dropped substantially to 67.0; the one year out expectations fell to 67.0 frm 81.0 at the end of Oct. The declines in the survey are one on hand concerning, but the declines were so intense markets are not taking it too seriously. Sometimes when data is way off expectations markets toss it out or do not take it at face value; so far that appears to be the case given the minor reactions in both stocks and rate markets.
Mortgages are holding today so far, as is the 10 yr note. The 10 yr has flat lined for two months essentially sticking in a range of 10 basis points, from 3.40% to 3.50% with a few but unsustainable exceptions. It is the coiling spring scenario; once the tight range is breached it will set a big move in the direction of the breakout. Tight ranges usually imply the market is in balance between bearish and bullish outlooks, the longer the balance is maintained the possibility of a huge move in the direction of the break increases. The likelihood is a break to higher interest rates based on present concerns on inflation as the dollar falls and the recovery improves.
Market Minute information for November 13, 2009 provided by:
 Patsy Bailey Mortgage Banker |
 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 |
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