At 9:00 Sept net foreign
purchases of US notes and bonds totaled $66.2B, much better
than the $17.5B expected. The numbers
showed China continued to be the big buyer in treasuries at
$43.6B in Sept, followed by the Caribbean, also know as
hedge-funds coming in 2nd with $36.4B while Japan was a net
seller at -$12.8B. Bonds got a bit of a boost and a bump in
size, but these numbers are old and there remains a number
of stuff on the day's docket.
Early overnight trading in
the stock index futures had the DJIA down over 100 points
from the close yesterday; by 8:30 the DJIA was trading down
just 20 points. Crude oil is trading
stronger today so far but still hanging close to the $50.00
technical support levels. At 9:30 on the open the DJIA was
off 25 points. The inability for the S&P to hold its early
Oct low is adding more selling in stocks; our target remains
7500 on the DJIA.
Bernanke and Paulson are on
the Hill now to testify---again. No
doubt they will be grilled on Paulson's decision to change
the use of the TARP $700B bailout away from mortgages to
shoveling money to banks and other institutions that were
lining up for the grab bag.
Bernanke re-iterated the
three elements of TARP---so far:
The first allows money market mutual funds
to sell asset-backed commercial paper to banking
organizations, which are then permitted to borrow against
the paper on a non-recourse basis from the Federal Reserve
Bank of Boston. Usage of that facility peaked at around
$150B. The second program involves the
funding of a special-purpose vehicle that purchases highly
rated commercial paper issued by financial and nonfinancial
businesses at a term of three months. This facility has
purchased about $250B of commercial paper. A third
facility, expected to be operational next week,
will provide a liquidity backstop directly to money market
mutual funds. This facility is intended to give funds
confidence to extend significantly the maturities of their
investments and reduce over time the reliance of issuers on
sales to the Federal Reserve's special-purpose vehicle.
Today’s Nov NAHB housing
market index is expected to be unchanged at 14, moving
sideways after the 3-point decline to the record low of 14
seen in October. The NAHB index only has
history back to 1985, which means that the series didn’t
exist during the 1973-75 recession and the double-dip
recessions of 1980 and 1981-82. The index from the National
Association of Home Builders is designed to measure the
general state of the single-family home building
marketplace, measuring present sales, 6-month sales
expectations, and traffic of prospective buyers. The index
fluctuates between 0 and 100, with the level of 50
representing the demarcation between a “good” versus “poor”
outlook for the single-family home marketplace. The NAHB
index is currently at rock bottom. Sentiment can’t get much
worse among homebuilders, whom are simply in a survival mode
and are only building homes for which they have firm
contracts
Nothing left today but
watching the stock market for direction of treasuries,
although recently the safe have knee-jerks are much less
significant. In the meantime the mortgage markets are
sitting generally unchanged this morning as they did
yesterday. It is all in treasuries these days; but if the 10
yr note succumbs to selling the reaction in the mortgage
markets will push prices lower.
PRICES @ 10:00 AM
EST
|
10
yr note |
101.05 +9/32
3.61% -4 BP * Dec 10 yr note contract 117.27 +13/32 |
|
5
yr note |
102.09 +1/32
2.26% -1 BP |
|
2
Yr note |
100.18 unch
1.20% -0.5 BP |
|
30
yr bond |
105.22 +11/32
4.16% -2 BP * Dec 30 yr bond contract 119.09 +15/32 |
|
Libor Rates |
1 mo 1.452%; 3
mo 2.217%; 6 mo 2.631%; 1 yr 2.795% |
|
30 yr FNMA
6.0 Jan |
101.00 +2/32
(+3/32 frm 10:00 yesterday) |
|
15 yr FNMA
5.5 Jan |
100.18 +2/32
(+4/32 frm 10:00 yesterday) |
|
30 yr GNMA 6.0 Jan |
100.28 +2/32
(+2/32 frm 10:00 yesterday) |
|
15 yr GNMA 5.5 Jan |
100.23 +2/32
(+2/32 frm 10:00 yesterday) |
|
Dollar/Yen |
96.92 +0.55 yen |
|
Dollar/Euro |
$1.2645
+$0.0009 |
|
Gold
Dec |
$739.10 -$2.90 |
|
Crude Oil Dec |
$55.52 +$0.57 |
|
Goldman-Sachs Commodity Index |
396.86 +0.87 |
|
DJIA |
8275.97 +2.39 |
|
NASDAQ |
1477.99 -4.06 |
|
S&P 500 |
848.78 -1.97 |