Posts Tagged ‘10 year US Treasury bond yield’

Market recap for week ending 5/10/2013

Posted on: May 10th, 2013 by Fred Bohman No Comments

At the time I am writing this, mortgage interest rates are 1/8th of a percent higher than they were last Friday.

This week was a slow week in terms of relevant economic reports. Markets were still digesting last Fridays better than expected employment report for most of this week. Last Friday we saw a big spike in the 10 year Treasury bond yield(10yr) following the employment report. Traditionally the 10yr and mortgage rates are closely tied, but in this case mortgage rates increased but not nearly as much at the 10yr.

Looking forward we have to monitor the economic reports closely to see if last Fridays employment report was fluke or it was beginning of a new trend. If more strong economic reports continue to come out look for interest rates to start climbing. On the flip side if economic outlook returns to negative, rates will stabilize where they are now.

Market recap for week ending 9/21/2012

Posted on: September 21st, 2012 by Fred Bohman No Comments

This week was a good week for interest rates. Rates today are just over 1/8 of a percent better than they were on Monday. The main reason we saw rates improve this week was because of the Federal Reserve’s (FED) decision last week to do another round of quantitative easing.

Generally the 10 year US Treasury bond moves in unison with mortgage bonds, but after the FED’s announcement to focus on buying mortgage bonds in this round of easing we have seen the gap between the two narrow. This is good for mortgage rates because mortgage bonds have a direct impact on mortgage rates but Treasury bonds don’t.

European economies are continuing to slip deeper into recessions. Europe is still wrestling with their debt problems but seems to be on track to resolving them. This would generally be consider bad news for US mortgage rates, but the positive effect of the FED’s decision to buy more mortgage bonds outweighed the negative.

No major economic reports are schedule to be released for the rest of the day so I don’t expect any major movement in the market today.

Mortgage rate outlook and market preview for the week starting July 16th 2012.

Posted on: July 16th, 2012 by Fred Bohman No Comments

Early activity saw stock indexes a little weaker this morning after the DJIA jumped 204 points last Friday. The 10 yr note at 9:00 am +10/32 at +12/32 at 1.46% and 30 yr mortgages +7/32 (.22 bp) frm Friday’s close. Prior to 8:30 data the 10 yr traded unchanged at 1.49% but June retail sales reported at 8:30 were much weaker than what was thought. Overall sales expected up 0.2% fell -0.5%; ex auto sales was expected +0.1%, was down 0.4%. The softer sales data sparked a little buying in treasuries and mortgages but really didn’t have much of an impact on the key stock indexes. A weakening job market is sapping households of the confidence and income gains needed to boost expenditures, which account for about 70% of the economy. Without gains in spending at retailers the economy isn’t going to improve and may slip further.

At 8:30 the July NY Empire State manufacturing index was better than forecasts. Up to 7.39 frm 2.3 in June; estimates were for the index at 3.8. New orders decreased to minus 2.7 this month from +2.2 the prior month. A measure of shipments rose to 10.3 from 4.8. The employment measure rose to 18.5, from 12.4 in June. The index of prices paid fell to 7.4 from 19.6. That new orders declined offset the better overall index and the increase in the employment index. At 10:00 May business inventories were expected +0.2%, as reported up 0.3%

At 9:30 the stock market opened weaker; the DJIA -30, NASDAQ -6, S&P -3. The 10 yr note at 9:30 1.45%, 30 yr mortgage prices +10/32 (.31 bp).

This week has a lot of data to focus on and Fed chief Bernanke testifying at Congress on Tuesday and Wednesday. This morning the bellwether 10 yr is at its key technical resistance. Global economies continue to decline with the IMF out this morning once again lowering its forecasts for growth.

In Europe this morning, the ECB would no longer oppose the forcing of losses on senior bondholders of euro-area banks. The Wall Street Journal today reported the ECB’s change of position, after the Frankfurt-based ECB consistently opposed handing losses to senior creditors of Irish banks following the collapse of the country’s financial sector. The ECB also opposed efforts to restructure Greek sovereign debt and refused to take losses on Greek government bonds held on its balance sheet earlier this year. European officials are now debating how best to rescue Spain’s banks after its leaders requested 100 billion euros ($122 billion) of international aid last month, becoming the fourth euro nation to seek help after Greece, Ireland and Portugal.

This morning the 5 yr treasury set a new record low yield while the benchmark 10 yr note at 1.44% is 5 basis points lower and a record low. While at 1.45% and fractionally below 1.46% the key technical resistance, we would want to see some follow-though to the rally to confirm the 10 yr will move to lower rates. With Bernanke testifying tomorrow and Wednesday traders will look for anything in his statement or in the Q&A that would signal the Fed will ease again. If the Fed does another easing move we think the Fed will concentrate more on buying MBSs as well as long term treasuries. As we have noted in the past, an easing won’t do much to turn the slowing economy and it won’t contribute to adding any jobs, but the hope is banks will loosen lending practices thus increasing borrowing. It is unlikely though that will actually occur. The crux is that consumers are not in a borrowing mode except re-financing mortgages.

China’s growth slowing on Europe’s spreading debt problems

Posted on: July 9th, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting July 9th 2012.

Friday the 10 yr note pushed slightly out of its month long trading range on another soft employment report showing growth continuing to decline on month to month basis. The 10 yr had very solid resistance at 1.565 for over a month on any rallies, Friday the note closed at 1.55%, this morning the 10 yr is trading down at 1.52% with stock indexes slightly weaker in pre-open futures trading.

Not a lot of critical data this week; Treasury however will auction s, 10s and 30s Tuesday through Thursday. With the technicals looking better on the 10 yr and mortgages how well the bidding goes will set the tone. US stock market also plays its usual roll; if the indexes rally it will keep a lid on the bond markets continual improvement.

Today begins Q2 earnings season with Alcoa starting the parade after the markets close this afternoon. Europe still in the headlights with interest rates in Spain up again today. The euro fell to its lowest level in two years against the dollar as regional finance ministers gather in Brussels to discuss crisis-fighting measures adopted by heads of government at a summit last month. Spanish and Italian bonds fell amid concern finance ministers will fail to agree on sufficient crisis-fighting measures to stem the euro area’s woes. Recapitalizations of banks by the European Stability Mechanism will have no need for a sovereign guarantee, commission spokesman said in Brussels today. Details of how the future system will work remain to be negotiated.

Consumer prices in China rose 2.2% in June from a year earlier, according to a report released today. That’s the slowest pace in 29 months and compares with the median forecast for a 2.3% inflation rate. China’s economy is softening on Europe’s contagion that has infected US growth also. China cut rates last week and lessened reserve requirements for banks in a move to increase lending in the country.

At 9:30 the DJIA opened -12, NASDAQ +1 and the S&P unchanged; the 10 yr note rate at 1.54% after being down to 1.52% earlier. Mortgage prices up 5/32 (.15 bp).

Now that the 10 yr note has cracked its key resistance at 1.56% the technical outlook suggests the 10 yr could move to its low in early June at 1.47% and continue to push mortgage rates lower. As is the case, it’s a moving target though with Europe holding the key. There is concern now that the EU finance ministers will fail again to come up with agreeable details on supporting banks in Spain. Last week’s EU summit set the outline with ministers agreeing to help failing banks in Spain and Italy but as usual there was nothing specific, being left to the ministers to figure it out. Presently the view is there will be difficulty accomplishing the stated goal.

Europe’s economy is showing increasing signs of weakness

Posted on: July 2nd, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting July 2nd 2012.

Treasuries and mortgages doing a little better to start this week’s action. The 10 yr note +6/32 at 1.62% and at 9:30 30 yr mortgages +3/32 (.09 bp) frm Friday’s closes. The DJIA opened -16, NASDAQ -3.

The 4th falls in the middle of the week. Trading volumes should be thinner than usual with many taking a few days off. There are a number of key measurements this week; both June ISM reports (manufacturing today (see below) and services on Thursday), weekly claims on Thursday and the June employment data on Friday. The early forecast for the employment report, non-farm payrolls +100K and non-farm private jobs +105K with the unemployment rate unchanged at 8.2%.

At 10:00 two reports; the June ISM manufacturing data main index was expected at 52.2; as reported manufacturing in the U.S. unexpectedly contracted in June for the first time in almost three years, indicating a mainstay of the U.S. expansion may be faltering. The Institute for Supply Management’s manufacturing index fell to 49.7, worse than the most-pessimistic forecast in a Bloomberg News survey, from 53.5 in May. The ISM’s U.S. production index decreased to 51 from 55.6. The new orders measure dropped to 47.8, the lowest since April 2009, from 60.1, and the gauge of export orders declined to 47.5, also the lowest in three years, from 53.5. The employment gauge decreased to 56.6 from 56.9 in the prior month. The unexpected decline sent interest rates lower and stock indexes down frm pre 10:00 levels. May construction spending also at 10:00 was stronger than the 0.2% expected, increasing 0.9%.

Europe’s economy is showing increasing signs of weakness after stalling in the first quarter as the worsening fiscal crisis erodes the confidence of executives and consumers. The gauge of euro-region manufacturing held at 45.1 in May, London-based Markit Economics said today in a final estimate. That compares with an initial estimate of 44.8. A reading below 50 indicates contraction. The European Central Bank’s governing council gathers in Frankfurt on Thursday with speculation officials will lower their benchmark interest rate by at least 25 points to a record low of 0.75% as the economy hovers near recession.

A purchasing managers’ index for China fell to 48.2 in June from 48.4 in May, HSBC Holdings Plc and Markit said today. A similar measure released by the government yesterday also slid. The purchasing managers’ index released yesterday by the Beijing-based statistics bureau and China Federation of Logistics and Purchasing fell to 50.2 in June from 50.4 in May. The data showed inflation pressures waning, a slump in export orders, a lack of domestic demand and a “modest” decline in the size of the manufacturing workforce. The gauge of export orders in the federation’s index contracted for the first time since January.

The US 10 yr note and 30 yr mortgage rates continue to trade in their respective narrow ranges; both are holding within five week ranges but there is an increasing belief Europe won’t drive safety moves into US treasuries as strongly as the last eight months. One of key reasons US rates have stayed low is due to investors parking money in the safest places as Europe wrestles with how to save banks and cut spending.

US markets still watching Europe’s every move.

Posted on: June 25th, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting June 25th 2012.

The 10 yr note is improving as are mortgage prices while the stock indexes are opening lower. The 10 yr yield has ranged from a high of 1.68% and a low of 1.57% over the last three weeks, mortgage rates have ranged just 6 basis points in rate on 30 yr mortgages in the same time frame. The Fed has revised its economic growth outlook lower for the first time since last November, mostly based on the decline in Europe’s economy. On Thursday and Friday there is an EU summit meeting that isn’t likely to resolve much; meeting upon meeting over the last two years has not accomplished anything of significance for the long run; just putting out brush fires. This time should be no different as Germany remains opposed to a plan that would set up deposit insurance fund to protect all depositors against failures. Germany stands opposed to any plan that allows individual states to set their own austerity targets.

Billionaire investor George Soros called on Europe to start a fund to buy Italian and Spanish bonds, warning that a failure by leaders meeting on June 28 to produce drastic measures could spell the demise of the currency. German Chancellor Angela Merkel said in a June 15 speech that she opposed “premature” proposals for issuing euro-area bonds. Spain formally requested a bailout for its banks as it negotiated details of the aid. A few weeks ago Soros commented the EU had 90 days to work out a solution before the euro currency would collapse. Europe’s debt crisis is putting pressure on corporate earnings globally with companies cutting forecasts and signaling profits will fall at more companies this year.

Early this morning the 10 yr note traded up 18/32 at 1.61% and 30 yr FNMAs were up as much as 8/32 (.25 bp), by 9:30 the 10 was up 14/32 and 30 yr Fannie up 4/32 (.12 bp). The DJIA opened -90, NASDAQ -33; the 10 yr up 16/32 at 1.62% -5 bp and 30 yr MBS prices +6/32 (.18 bp). Markets expecting the Supreme Court decision sometime today; talk that the ruling would be announced at 10:00.

At 10:00 May new home sales were expected to be up 2.0% frm April; as reported sales jumped 7.6% to 369K units (annualized); April sales however were revised lower, from +3.3% to -1.2%. Based on the sales pace there is a dwindling supply, 4.7 months down from 5 months in April. The median sales price at $234,500 up 5.6% yr/yr. Sales total was the largest since April 2010; the 4.7 month supply is the lowest since Oct 2005. There was no initial reaction to the report in the stock or bond markets.

This week has Treasury selling $99B of notes Tuesday through Thursday. There are a number of key data points; May consumer confidence, May durable goods orders, weekly claims, May personal income and spending, June Chicago purchasing mgrs. index lead the parade.

The recent trading ranges in the treasury and mortgage markets are likely to hold any movement this week. The EU summit isn’t getting any respect from the markets with Germany continuing to resist about any idea tossed out for consideration. As long as Germany is unwilling to bend (and take on more risk) there is little chance there is going to be an acceptable long range “plan”. Germany won’t move off its stringent objections to anything as long as it isn’t forced to do so. The force would come when the German economy softens more and the German bond market comes under pressure; so far German debt yields very low rates as demand for its debt from Europeans continues robust.

Greece staying in EU for now

Posted on: June 18th, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting June 18th 2012.

The Greece vote yesterday to some degree confirmed Greece will stay in the Union. At least for a while. The conservative party that backs keeping Greece in the EU won by less than a majority taking 30.1% of the vote with 65% counted while the radical Syriza party that wants to bolt the Union took 26.5%. The conservative New Democracy Party has 103 seats of the 300 seat parliament while Syriza has 70 seats; now the New Democracy Party has to form a government that has the votes to work out a plan to stay in the Union. The situation in Greece is far from settled and we continue to believe before its all over (whenever that may occur) Greece will leave the Union as will some of the other troubled debt loaded countries. In the meantime that will likely last another couple of years the world will have to put up with what now appears a failed experiment joining so many sovereign countries under one umbrella. Last week Alan Greenspan joined in with his comment, “ it was a noble but failed experiment. 17 countries, 17 parliaments, 17 central banks; 17 opinions; not an easy situation to expect something of substance.

Spain’s 10 yr debt rose above 7.0% today; Spain is slipping and may lose its borrowing party while getting money frm the EU and ECB to keep its banks from failing. Spanish debt has slumped, pushing the 10-year yield today to a euro-era record of 7.14%. The bonds are the worst performers among 26 developed markets since June 9, when the Economic minister said he would request as much as 100 billion euros ($127B) of emergency loans from the euro area to shore up a Spanish banking system hobbled by bad assets. The bank aid will increase Spain’s debt to about 90% of gross domestic product, Moody’s Investors Service said on June 14, since the sovereign is responsible for repaying the loans. That threatens to further limit its ability to sell bonds, Moody’s said, as it dropped Spain’s rating three levels to Baa3, one step above junk. Italy’s 10-year yield climbed 14 basis points to 6.06%. The U.K. two-year gilt yield slid to as low as 0.173%, a record.

G-20 countries meeting in Mexico with the topic being Europe. These G meetings usually don’t amount to much; photo ops and quotes structured to make leaders look good. Nevertheless there will be comments about how G-20s are concerned and will help if certain conditions are met. After the G-20 gathering, Italian Prime Minister Mario Monti will host a meeting in the Italian capital on June 22 with Merkel, Hollande and Spanish Premier Mariano Rajoy to seek common ground. The three will gauge Germany’s position after Merkel last week said her country’s resources weren’t “infinite” in the “Herculean task” of mastering the debt crisis — and that jointly issued euro bonds and a euro-wide deposit insurance were a non-starter. Merkel’s role as leader of Europe’s biggest economy gives her an effective veto on crisis-fighting policy.

Treasuries and mortgages doing slightly better this morning as the stock indexes slightly weaker. At 9:30 the DJIA opened -47, NASDAQ -16; the 10 yr note +5/32 at 1.57% -1 bp; 30 yr mortgage prices at 9:30 +1/32 (.03 bp).

The only data today; the June NAHB housing mkt index was expected at 28 unchanged from May; the index increased 1 point to 29 after increasing 4 points in May. The index is at its best level since May 2007; in that context it clearly shows how weak the housing market is.

This week most all data is directed to the housing sector with May housing starts and permits on Tuesday and May existing home sales on Thursday. Thursday we get the weekly unemployment claims currently expected -6K at 380K. Thursday also has the key Philadelphia Fed business index, expected at -3.5 frm -5.8 in May.

It looks like a quiet day; interest rate markets about unchanged and the stock market showing little appetite for rallying so far. If he stock indexes turn positive the bond and mortgage markets will likely see some selling. With the Greek vote behind us the next key event is the FOMC policy statement on Wednesday at 12:30 then Bernanke’s press conference at 2:15. In the absence of any news out of Europe the US markets are not likely to change much until Wednesday afternoon.

Spain seeks emergency bail out

Posted on: June 11th, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting June 11th 2012.

Very early this morning the 10 yr note price traded down 10/32 at 1.66% but by 9:00 down -3/32 at 1.64% (the 10 hit 1.72% briefly on the news announcement); mortgage prices at 9:00 generally unchanged. Spain abandoned unilateral attempts to rescue its banks and became the fourth country in the 17-member currency union to seek an emergency bailout. The aid blueprint hammered out in an emergency conference call among euro finance chiefs two days ago is designed to create a line of defense if the Greek voting unleashes a new bout of market turmoil. Next Sunday Greece will vote again to form a government, two months ago there was no consensus with the country tilting toward rejecting the EU austerity pushed on it. The most recent surveys showed the main party opposing the terms of its bailout vying for first place.

As the clock ticked on, the positive take over Spain’s cash infusion began to wear off; the stock indexes t 8:00 were +100 on the DJIA, at 9:00 +69. The bond market lost some of its price declines; while the Spain thing is welcome, there are still very high hurdles with Greece’s election and the belief Spain will need more to fend off bank collapses. Next week is a huge weak for the US and global markets. On Sunday the Greek election that at this point is too close to call on whether citizens will essentially vote to leave or stay, recent polls are slightly positive that voters will vote to say. On Monday the 18th there is a G-20 meeting scheduled I Mexico that will focus on Europe’s mess. On Tuesday and Wednesday (19th and 20th) the FOMC meets an Wednesday the policy statement and Bernanke’s press conference. There is still many that believe the Fed will announce some kind of QE, most likely an extension of Operation Twist set to expire at the end of the month.

The excitement over Spain’s asking for $125B to shore up its banking system was short-lived with markets pulling back from the highs in stock markets. It is a step but a baby one at best, and indicates there are more troubles ahead. Attention now will turn to Italy, the third largest economy in the EU. The bailout helped move Italy to the frontline of the crisis, as bets increased Europe’s third largest economy may be the next one to succumb. Italy’s shrank 0.8% in the first three months of this year from the fourth quarter, confirming an initial estimate. Italy has 2 trillion euros of debt, more as a share of its economy than any advanced nation after Greece and Japan. Its Treasury has to sell more than 35 billion euros of bonds and bills per month to keep frm defaulting.

Re-capping the reaction to the Spanish bailout; initially there was euphoria, the US 10 yr note last night hit 1.72% frm 1.64% close last Friday; it lasted about a minute or so before it backed down. Europe’s stock markets are better but off their highs, the US stock indexes also off the best pre-opening levels at 9:30. The Spain deal is a slight plus but not much and now the spotlight will also turn onto Italy and of course the Greek election next Sunday.

At 9:30 the DJIA opened +75, NASDAQ +24; the 10 yr note rate at 1.65% +1 bp with 30 yr mortgage prices -4/32 (.12 bp).

Expect continued volatility today in the US markets. This week Treasury will auction 3 yr, 10 yr an 30 yr issues to borrow $66B, the same amount Treasury has gone for over the last few months. Economic data; the calendar has meat on the bone and will get attention but as long as Europe flounders the main emphasis will remain on what snippets and news comes from the region as it continues to drag down global economic outlooks. There isn’t any data out today.

Europe’s debt problems pushing US mortgage rates to record lows

Posted on: June 4th, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting June 4th 2012.

Early activity this morning had the bond and mortgage markets trading lower after the explosive rally on Friday on the weak May employment report. The 10 yr note and 30 yr bond are falling in rate on increasing global moves to safety. Obviously Europe is leading the parade to safety as there is little progress in dealing with its debt and rapidly declining economy; China is slowing quickly and India is now showing cracks in its economy. In the US we are doing better for the moment but also being pulled down by the global softening. Investors of all sizes are simply parking money in sovereign debt, in the US, Germany and other AAA rated sovereign debt (the US rating is AA+). Investors no longer looking to a return on investment, just return on the principal.

As euro-area unemployment reached its highest level on record, manufacturing output contracted for a 10th straight month in May and the currency plunged close to a two-year low against the U.S. dollar, leaders continued to wrangle over the details of support for the currency bloc. There is an increasing cry in Europe from the debt ridden countries to institute euro bonds. With markets bracing for further deterioration in Spain’s finance sector and a possible Greek departure from the 17-member euro area, there are calls for a “banking union” in Europe involving a centralized system to re-capitalize lenders. Germany’s Merkel shut off another crisis-fighting avenue the same day as she toughened her opposition to euro-area debt sharing, saying that “under no circumstances” would she agree to euro bonds. Germany holds most of the cards, so far unwilling to play many of them fearing the inevitable, decline in Germany’s economy and its own debt if it has to back euro bonds.

Treasuries and mortgage markets are technically overbought while the US equity market is oversold. A bounce back is not unusual with short term oscillators and momentum indicators at extreme levels. Traders will be reluctant to step in now until markets can consolidate and test the underlying demand at current levels in financial markets. There is however no reason to expect interest rates will increase much given the underlying fundamentals.

The DJIA opened +15, NASDAQ +18; the 10 yr at 9:30 -20/32 at 1.53% +7 bp and 30 yr MBS prices -6/32 (.18 bp).

At 10:00 the data for the day, April factory orders expected +0.1%, took another dive to -0.6% and March orders were revised to -1.9% frm 1.5% The reaction turned stock indexes down from slight gains. The 10 yr was -20/32, it bounced up to -14/32.

There isn’t a lot of key economic measurements this week; weekly clams and the May ISM services sector lead the headlines. We expect a choppy bond and mortgage markets this week to ease the over-extended move we saw last week. Last Friday’s heavy buying in treasuries looked much like a capitulation from the bond bears after the 10 yr easily broke 1.50%. One media guru was out today conjecturing that the 10 yr could go to 1.00% before the rate markets turn around. We can’t get on board with that however. Although Europe at the moment looks impotent in dealing with the economy and debt problems, it isn’t unreasonable that in the next few months there will be a plan in place that will reduce risk off trades into bonds. If Europe can’t come up with a fix that makes sense in the next few months, the entire EU may come tumbling down in a heap. That isn’t an option so something will have to give In the present stalemates that have grid-locked all of the region.

Spain is Europe’s next big problem

Posted on: May 29th, 2012 by Fred Bohman No Comments

Mortgage rate outlook and market preview for the week starting May 29th 2012.

This is employment week, always a big one for the markets. ADP will report its estimate for private jobs in May on Thursday then the BLS reports the “official;” report on Friday. In the meantime Europe still dominates overall, now Spain is taking the spotlight on concerns Spanish banks are teetering on the edge and need capital infusion in some manner in order to remain solvent. It only gets worse in Europe, Greece is increasingly viewed as leaving the EU with the deciding vote in about two weeks (June 17th).

How low can US interest rates fall? Based on comparisons of some other AAA sovereign yields the US 10 yr note is cheap, trading at 1.73% this morning compared to Germany’s 10 yr bund at 1.346%; the spread .385 bp at 9:30. $ yrs and counting, the US budget deficits have exceeded $1.0T with US debt downgraded by rating agencies and no longer AAA. One of the key drivers for US interest rates is there are better yields here than in Germany, Australia and other better controlled countries. The extra yield investors receive for holding Treasuries is an added benefit for investors seeking a haven from Europe’s sovereign debt turmoil. In the US there is absolutely no incentive for politicians to focus on budgets; neither Democrats or republicans, no matter what comes out of their mouths, our politicians have no interest in actually dealing with excess spending regardless of what you may here from any of them.

Home values in 20 U.S. cities fell in the 12 months ended March at the slowest pace in more than a year as lower borrowing costs and an improving job market gave sales a boost. The S&P/Case-Shiller index of property values fell 2.6% from a year earlier after a 3.5% drop in February.

At 9:30 the DJIA opened +83, NASDAQ +25; 10 yr note +3/32 at 1.73% -1 bp and mortgage prices that were slightly better early were unchanged.

At 10:00 May consumer confidence index from the Conference Board, expected at 69.4, was a lot weaker at 64.9 frm rev’d Apr at 68.7 frm 69.2. Expectations at 77.6 frm 80.4, the present situation at 45.9 frm 51.2. The report on consumers is a lot weaker than what the U. of Michigan consumer sentiment index reported last week. The reaction wasn’t much, the 10 yr note moved up 2/32 in price but the stock market ignored the report.

Probably won’t see much movement in the financial markets through the rest of the day; at least until; 3:00 for the stock market. The final hour in stock trading is generally volatile. The interest rate markets are not likely to improve a whole lot this week until employment on Friday or a significant decline on German 10 yr bunds. Technically the US 10 yr is going to need a large push to move and stay below 1.70%. Mortgage rates are likely to be unchanged through most of this four day week.