Last week, we anticipated today being a “no news” day, expecting the bond market would pick up right where it left off. Not quite the case and a great reason to fear “headlines” at any time. Over the weekend, China preempted the G-20 meeting, announcing that they will allow more flexibility with their currency (Yuan). The move is very stock and global growth friendly as it would remove imbalances in manufacturing and exports. Consequences of their actions have pushed the dollar lower and bonds, notes, etc. to higher yields.
Nothing huge here as the Dow is plus 107, 10 year note down 20/32’s (yield 3.29%), and mortgage backs off 7/32’s. Potentially, this is big news but then again it is China. Let’s just say traders have “trust” issues. The week ahead will fire up tomorrow with Existing Home Sales, FHFA House Price Index, and day one of the FOMC meeting. Wednesday, the FOMC concludes with any change in Fed Funds rate/monetary policy due at 1:15 pm cst.
New Home Sales will also be out in the morning. Thursday’s data will release Durable Goods, Weekly Unemployment Claims, and the Kansas City Fed Survey. We’ll end the week with final GDP Q1 and the Michigan Sentiment Survey. This week’s data will be important as the focus will be on Housing, Unemployment, and the Fed. All three seem to be the biggest drag on the economy.
In the “for what it’s worth” department, top analyst Meredith Whitney has a bearish call on equities (stocks) and expects the U.S. economy to have a rough second half. If true, expect Austin mortgage rates to stay low into 2011. Technically, I completed my chart work on the cocktail napkin Friday night. Bears have the advantage but only slightly, leading us to believe we’re trapped in a triangle pattern range trade. Let’s call the market neutral and have great week.