Mel's Blog

July 09 Market News #4

July 7th, 2009 12:59 PM by Mel Samick

Tuesday's bond market has opened relatively flat with no relevant economic news on the agenda today. The stock markets are showing losses with the Dow down 130 points and the Nasdaq down 32 points. The bond market is currently up 19/32, but we will see an improvement in this morning's mortgage rates  due to strength late yesterday.

There is no relevant economic news scheduled for release again today. The weakness in stocks will probably keep bonds from turning sour today. We have seen some improvements in mortgage rates over the past couple of days, but there is question as to whether or not they can hold. It currently appears that they may for the time being, but we know that mortgage rates will rise much quicker than they improve. Accordingly, if still floating an interest rate please be very cautious over the next several days. At least until we get the results of Wednesday's Treasury auction and a couple of the major earnings releases behind us.

There are only two monthly economic reports being posted this week and they both come Friday. There are also two relevant Treasury auctions left that may influence mortgage rates. 10-year Notes will be sold tomorrow and 30-year Bonds Thursday. These sales can influence market trading in bonds and possibly affect mortgage rates. If the sales are met with a strong demand from investors, particularly Wednesday's sale, we should see afternoon improvements in bonds that could lead to downward revisions to mortgage rates. However, if concerns over the amount of debt being sold keeps buyers on the sidelines, we may see bonds fall after results are posted at 1:00 PM ET and mortgage rates move higher during afternoon trading tomorrow or Thursday.

Tomorrow kicks off the earnings season when Alcoa posts their quarterly results. Market participants are anxiously waiting for these results to see just how hard the weak economy is affecting earnings. Just as important as this past quarter's results are their forward-looking estimates. If revenue, earnings and projections from the big-named companies exceed expectations, stocks will likely rally, making bonds less appealing to investors. But if results are weaker than expected, indicating that the economy is still stifling earnings, bonds will be more attractive to investors as stocks slide. This could help boost bond prices and lead to lower mortgage rates.

                  Mel

Posted in:General
Posted by Mel Samick on July 7th, 2009 12:59 PM

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