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Financial Market Update
This week; after a week with little new economic data, this week’s calendar has a number of key reports beginning Monday with March retail sales and the NY Empire State manufacturing index. The benchmark 10 yr note ended last week at 1.99% an improvement of 6 basis points in rates on the week. Europe’s debt crisis resurrected a week ago increasing safety moves into treasuries and global economic conditions are slowing somewhat; the two factors driving rates back down. Mortgage interest rates on 30s were down about 5 basis points last week. With the current view that Europe and China are slowing, and the US although growing is also slowing based on the data on employment over the last two weeks.
The 10 yr note at 2.00% has the potential to fall to 1.90% but at this point we don’t think it will go much lower than that. Mortgage rates are within 10 basis points of their best levels. Europe’s debt issues, a present view that global economies will slow has increased the belief the Fed will likely do more easing; it all depends on the data we see this week. Next week the FOMC will meet on Tuesday and Wednesday with the policy statement that is expected to confirm the Fed is thinking about easing. The previous meeting’s policy statement disappointed as there was no mention that the Fed was thinking an easing move.
TBWS
The 10 yr note at 2.00% has the potential to fall to 1.90% but at this point we don’t think it will go much lower than that. Mortgage rates are within 10 basis points of their best levels. Europe’s debt issues, a present view that global economies will slow has increased the belief the Fed will likely do more easing; it all depends on the data we see this week. Next week the FOMC will meet on Tuesday and Wednesday with the policy statement that is expected to confirm the Fed is thinking about easing. The previous meeting’s policy statement disappointed as there was no mention that the Fed was thinking an easing move.
TBWS
Financial Market Update
This Week; there are a number of key data points that will be closely followed. The March employment data is the headliner with early estimates of 214K non-farm jobs created and the unemployment rates unchanged at 8.3%. The data comes on Good Friday with markets closed except the bond market will be open until noon, stay tuned though as the closing is still unsettled. IN the meantime we have ISM manufacturing and services sector data,, factory orders, ADP jobs estimate, weekly claims and Feb consumer credit. The 10 yr note and MBSs ended last week both working on their respective 20 day averages. Rate spiked two weeks ago and now have recovered somewhat; we continue to hold that interest rates will not fall much more from current levels, but won’t increase much either.
There are many that expect the Fed will do another easing move, equally about the same that don’t expect it. The Fed will not ease again unless the US economy reverses the current positive outlook. We caution though that even another easing by the Fed isn’t going to help the long end of the curve that much. Another easing move (printing more money) will likely increase inflation concerns.
TBWS
There are many that expect the Fed will do another easing move, equally about the same that don’t expect it. The Fed will not ease again unless the US economy reverses the current positive outlook. We caution though that even another easing by the Fed isn’t going to help the long end of the curve that much. Another easing move (printing more money) will likely increase inflation concerns.
TBWS
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