Treasuries and mortgages opened slightly weaker this morning with the stock indexes pointing to a higher open at 9:30. The dollar is the deal; weaker again today and the primary reason for US stocks rallying as they are. The Dubai default issue seems to have settled with belief it is a regional issue and not a major problem for US banks. One more example of unrealistic building, lending and excess that led the global economies to the edge. The debt problems in Dubai are not the last that will surface. Also at 9:30, the DJIA opened +105, the 10 yr note -10/32 3.24% and mortgage prices -4/32.
No early data this morning but at 10:00, markets had a lot to think about. The Nov ISM manufacturing data; the overall index was expected at 54.8 frm 55.7, it came at 53.6; new orders were better at 60.3 frm 58.5, prices pd at 55.0 frm 65.0 and employment at 50.8 frm 53.1. Any index read over 50 indicates expansion. Like the Three Bears: not too hot; not too cool; but just right as far as market reaction—-no immediate reaction. Oct construction spending at 10:00, expected to be down 0.4%, was unchanged; better, but not spectacular after a 6.1% increase in Sept. Finally, also at 10:00, Oct pending home sales, expected to be -0.3%, were actually up 3.7%.
The bond and mortgage markets are approaching technical overbought levels based on the relative strength indexes. With employment on Friday and Treasuries announcement on Thursday for next week’s auctions (3s, 10s and 30s) to push rates lower may be a challenge that is hard to overcome in the next few days.
“It will take time, it will take step-by-step a lot of different elements creating jobs,”…. “But I see no reason why there should be some new normal idea of the potential growth of the country.” These were comments from Larry Summers, Obama’s director of the Nat’l Economics Council. His remarks were directed to PIMCO’s view that a “new normal” will be slower growth and high unemployment for a lot longer than what the White House is predicting. The “new normal” as outlined by PIMCO’s CEO, Mohamed Al Arian, will include heightened government regulation, lower consumption, slower growth and a shrinking role for the U.S. economy. While we do not want to accept the view of PIMCO’s new normal, it is difficult to ignore that real possibility. The recession we are working through will likely set a new way to view spending by consumers and by businesses. The coming of higher taxes and the expense of the health care reform (assuming we get it) will set up a change. How that change will unfold will be that new normal PIMCO sees on the horizon. The real take-away here is what the US and global economies face in the next four to five years is a huge unknown after the downfall the world has experienced in the last three years.
Market Minute information for December 1, 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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Ashley Drake Gephart |
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