October 2012 San Diego Events

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Throughout October, Haunted Trail of Balboa Park The Haunted Trail is a stroll through the park that you will never forget. Red eyes glow and creepy fingers reach out to get you.       Time: See website for

Financial Market Update

This Week; markets should calm a little after last week’s FOMC statement that sent MBS markets screaming higher in price and mortgage rates lower. The Fed’s open-ended commitment to buy $40B a month of mortgage backed securities lit a fire under investors to continue selling treasuries and launch heavy buying of MBSs. The 10 yr note yield felt the pain, the yield on the 10 yr increased 20 basis points last week. 30 yr FNMA 3.0 coupon increased 73 basis points frm the close on Wednesday, the day before the FGOMC statement.

This week markets are likely to settle down compared to Thursday and Friday. August housing starts and permits, August existing home sales, Swept NAHB housing market index. Monday (today), the Sept NY Empire State manufacturing index expected -3.0 frm -5.9; the Sept Philly Fed business index out on Thursday expected  at -4.0 frm -7.1. Minus readings indicate contraction. Although markets should quiet down, there is still potential of high volatility on any news that catches traders off guard.

TBWS

Financial Market Update

This week; a big week for the markets. Last week Bernanke somewhat signaled the Fed is ready to ease again, most likely buying more long  dated treasuries and increasing the purchases of mortgage-backed securities. When will the Fed actually move? Presently the bond and stock markets are already beginning to discount an easing move as interest rates have fallen 30 basis points since the recent sell-off three weeks ago (10 yr note). Mortgage rates down 20 basis points. This week there are a number of key data points that will either confirm an easing move at the Sept 13th FOMC meeting, or hold off until the Oct meeting. Depends a lot on what this week’s data shows us. The two ISM August reports on manufacturing and services lead right into Friday’s August employment report. Stronger than expected data will diminish the outlook for easing in Sept; weaker will increase the likelihood of easing in Sept.

Also this week the ECB will meet on Thursday; it has been three years of dealing with the incessant talk and not very much accomplished. Based on past performances from the EU a betting man would bet the outcome of the meeting will not reveal anything of consequence, just more hope and frustration for global markets. Not until Sept 12th when the German high court will rule on the legality of ECB buying sovereign debt. In the meantime and since the beginning of the EU collapse Germany still holds the cards, unless Germany will back anything suggested by the ECB, IMF or the EU has little chance of being implemented.

This week markets may become volatile pending the data and especially August employment on Friday.

TBWS