This Week; last week markets had a lot of economic data to think about, most of which was more confirmation the economy has slowed after a short burst of growth. Two key indexes on manufacturing and business (NY Fed manufacturing and Philly Fed both now in contraction levels). Retail sales in May were down however less than what was thought, housing starts and permits better but the NAHB housing market index at its worst level in many many months. The DJIA managed some improvement ending its six week slide but will likely open weaker on Monday.
This week the economic calendar doesn't offer much other than May home sales. This week debt problems in Europe continue to dominate with increasing debate whether the EU will remain in tact and how much more Germany and France will take in holding the Union together. The main event this week is the FOMC meeting concluding on Wednesday with Bernanke's press conference after the meeting. The Fed will likely continue to try to put lipstick on the economic recovery and will continue to keep interest rates low through the rest of this year and into next. QE 2 is for the most part over, officially at the end of the month but most buying has already occurred. Expect continued questions about whether the fed will do more easing; anymore easing from the Fed is wasted efforts and money. The Fed has little left in its quiver that can directly impact the economy.
TBWS
Financial Market Update
This Week: after a week with little economic data markets will have plenty. Two inflation reports, May PPI and CPI; although we don't see any increase in inflation----at least the way markets see it---excluding the increasing prices of food and energy, prices are increasing and consumers are feeling it. Consumer credit continues to decline as most are doing their personal jobs of balancing the books while politicians and the Fed continue to spend as if there is nothing to fear. A few weeks ago the May Philly Fed, the NY Fed, and the Richmond Fed districts shocked markets with extremely weak reports on the regional economies; this week the June indexes from those districts will be released. Two reports on manufacturing the May decline in manufacturing jobs, the first declines in months, with industrial production and factory usage. May housing starts and permits also will be released; likely another disappointment.
Treasury and mortgage rates at record low levels will be tested; the stock market is likely to continue to decline in the wake of what now is irrefutable slowing of the economy. Meanwhile credit remains hard to get, especially in the home mortgage sector with the Fed, Congress and the Administration fiddling while the economy falters (again); until mortgage credit becomes more normal and less restrictive the US economy will struggle. No double dip recession, but no significant improvement in employment or consumer spending. The bond and mortgage markets likely have little left in the recent decline in rates but equally we see little reason for interest rates to increase given the weakening economic outlook. This week's economic data will set the tone for the week.
TBWS
Treasury and mortgage rates at record low levels will be tested; the stock market is likely to continue to decline in the wake of what now is irrefutable slowing of the economy. Meanwhile credit remains hard to get, especially in the home mortgage sector with the Fed, Congress and the Administration fiddling while the economy falters (again); until mortgage credit becomes more normal and less restrictive the US economy will struggle. No double dip recession, but no significant improvement in employment or consumer spending. The bond and mortgage markets likely have little left in the recent decline in rates but equally we see little reason for interest rates to increase given the weakening economic outlook. This week's economic data will set the tone for the week.
TBWS
Financial Market Update
This Week: the stock market will continue to struggle after the very weak employment report last Friday and all recent data that is confirming a slowdown in growth. The bond and mortgage markets will benefit as long as the outlook for the economy is expected to slip back. The 10 yr note is working on the psychological 3.00% level, to push yields lower it will take continuing declines in the equity markets. Another weekly lower lose in the stock market will make it six weeks in a row, not seen since back in 2002.
This week there is much in the way of economic data; Treasury will auction a total of $66b of notes and bonds beginning Tuesday through Thursday ($32B 3 yr, $21B 10 yr and $13B of 30 yr). The auctions will likely go well as most have in the last few months; however, there is always some concern that should keep interest rates frm improving much until the demand for the 10 yr note on Wednesday is measured. OPEC will meet on Wednesday with the Saudis wanting to push production higher, crude will likely trade lower in the meantime. While we continue to look for somewhat lower interest rates, this week may not provide much improvement. Technically the rate markets are overbought and likely will consolidate here for awhile. Early Monday rate markets were a little weaker with stock indexes also pointing to a lower open.
TBWS
This week there is much in the way of economic data; Treasury will auction a total of $66b of notes and bonds beginning Tuesday through Thursday ($32B 3 yr, $21B 10 yr and $13B of 30 yr). The auctions will likely go well as most have in the last few months; however, there is always some concern that should keep interest rates frm improving much until the demand for the 10 yr note on Wednesday is measured. OPEC will meet on Wednesday with the Saudis wanting to push production higher, crude will likely trade lower in the meantime. While we continue to look for somewhat lower interest rates, this week may not provide much improvement. Technically the rate markets are overbought and likely will consolidate here for awhile. Early Monday rate markets were a little weaker with stock indexes also pointing to a lower open.
TBWS
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