Treasuries and mortgages opened weaker early this morning on better trading in the stock index futures. At 8:30 Feb retail sales were much better than expected adding more to the stock indexes and pressing rate markets a little more. Retail were expected to be up 0.2% overall and ex autos unchanged; sales increased 0.3% and when auto sales are stripped out sales were up a solid 0.8%; when auto and gas sales are removed, up 0.9%. Sales were markedly stronger, particularly with the number of major snow storms in Feb that hit much of the East and Mid-West. At 9:00 the 10 yr note -7/32 at 3.76% +3 BP, mortgage prices -5/32 (.15 bp) and the DJIA index +39. At 9:30 the DJIA opened +20, 10 yr note -4/32 and mortgage prices off 4/32 (.12 bp).
Better retail sales this morning linked with last week’s better than expected employment report are suggesting consumers are starting to spend and job losses may have finally ended. That said, there is still a cadre of non-believers or at least still not convinced the economic recovery will continue. As each better than expected economic reading hits, it is increasingly difficult to question the recovery. While job losses may have essentially ended, new hirings will be very slow to rebound. Q4 productivity and unit labor costs strongly imply employers will continue to get more from workers and drag feet on new hirings. It really looks like the worst of the recession is behind us. Still bothersome is that there isn’t much recovery in the housing sector, the loss of wealth, slow increase in employment, a new consumer realization that excessive spending is bad and savings is good, and the possibility of a double dip if employment remains weak.
The U. of Michigan consumer sentiment index, expected to increase slightly to 73.8 frm 73.6 at the end of Feb. The index declined to 72.5 putting a little support in the bond market and taking away some of the strength in equities. Finally today, at 10:00 Jan business inventories, expected up 0.2%, were unchanged.
Market Minute information for March 12, 2010 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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