June 6th, 2012 9:47 AM by Mel Samick
Last week, investors were in a bearish mood after U.S. domestic economic data suggested a further slowdown in the economic recovery. In addition to unfavorable PMI data from China, and combined with the Eurozone's fiscal, financial, and economic woes, this led investors to seek a safe-haven in the form of government bonds. The 10-year yield touched a low level of 1.44 percent, before settling at 1.47 percent by the end of the week. Towing the same line, mortgage rates were also down last week. At the end of the week the Conforming Fixed 30-year rate leveled out at around 3.41 percent, while the Conforming Fixed 15-year rate finished at around 2.78 percent. Standard 5/1 ARM rates were hovering around 2.75 percent.
Despite the holiday shortened week, all the major indices were down by approximately 3 percent. The S&P closed at 1,278 while the Dow ended the trading week at 12,118. In major economic indicators released last week and to investors' disappointment, Non-Farm Payrolls only increased by 69,000 versus expectations of 150,000 for the month of May. The Unemployment Rate also ticked up to 8.2 percent against expectations of it remaining unchanged. The same phenomenon was noticed with the jump in initial jobless claims, which was up to 383,000 last week. Overall, the "not-so-robust" labor market has become a major factor in slowing any economic recovery.
In other economic news, first-quarter GDP was revised downward to reflect a growth of 1.9 percent which is lower than expectations. However, lower oil prices was an economic positive last week. Oil prices extended the declining trend last week with prices settling at $83.17 per barrel. The U.S. dollar ended higher against major currencies. While stocks were losing their shine last week, demand for gold was up globally. Gold ended up at $1621.40 per ounce, posting a 3.6 percent gain for week.
Information provided by NYCB Capital Markets