It’s been all about stocks today as earnings season (Q2) is in full swing. Earlier Today, bank analyst Meredith Whiney, raised her outlook on most banks due to interest rate spreads, mortgage originations, and Safe Harbor loan modifications. She call them good buys in the short run due mainly to the “mother of all mortgage quarters”. After that, the long term outlook for the economy, consumer, and employment component looks murky. That was all Goldman, B of A, Wells Fargo, and JPMorgan traders needed to hear as buy orders hit the screen.
Currently, the Dow is up 151 points with most banks up 3% to 6%. Mortgage backs opened on the soft side but only down a few 32’s. Currently, we’re fading a touch, off 7/32’s and teetering on a worsening price change. The 10 year note tells the tale of the tape, opening at 3.30% and now trading at 3.34%. Nothing more than wiggles in an otherwise neutral to bullish market. The week ahead will not only feature high profile quarterly earnings but PPI, inflation at the wholesale level and Retail Sales tomorrow, CPI, inflation at the consumer level, Empire State Manufacturing, and Industrial Production/Capacity Utilization will be released on Wednesday.
Thursday’s plate will give us a look at Weekly Unemployment Claims, Philly Fed Survey, and the National Association of Home Builders Index. We’ll end the week with New Residential Construction. Technically, we traded (note futures) as an inside day. Trading was concentrated near Friday’s high volume mark (near 3.30% yield) with 70% of the volume falling within one standard deviation of the profile.