Lots of economic data today with revised Q3 GDP, Consumer Confidence, Case-Shiller Home Price Index, FHFA Housing Index, FOMC minutes of the last meeting, and 42 billion in 5 year paper up for auction. Revised GDP came in near expectations, down .7% at 2.8% (revised from a previous 3.5%). Downward revisions to personal consumption and nonresidential fixed investment did the most damage. Case-Shiller Home price index measures home prices in 20 of the largest cities. The index rose .3% month on month yet is down 9.4% year on year. The Pacific and Mountain cities were the best performers and overall, stability was evident in most others. FHFA Home prices, a measure derived from only FNMA/FHLMC loans, was unchanged month to month and up .2% for the 3rd Quarter. The East North Central did the best, up 1.1% while the West South Central sat in the back of the bus but still up .1%. Consumer Confidence hit the tape better than expected, up .8 to 49.5. The rebound can be attributed to a 1.5 point increase in current expectations. The gain was offset by worsening business conditions and a slight dip in future consumer expectations. Details of the 42 billion dollar 5 year note auction will be out at high noon cst while FOMC minutes will hit the screen at 1:00 pm cst. All of the above has done little to move the market. For the most part it’s been a quiet yet slightly bullish day for bonds, notes and mortgage backs (up 3/32’s). Stocks were off 70 something early but have cut their losses in half, currently down 41 on the big board. Trading has really been a two way affair with the pro’s controlling most of the action. Think of the price action this way. When football teams have a big lead in the 4th quarter they are content to take a knee and wind the clock down to zero, trying to avoid injuries and mistakes. Same thing with traders. With most fixed income and equities traders having a good year, this late in the game (little over a month to year end) no one wants to screw their gains up as that is what bonuses are based on. That keeps a bid in treasuries, especially short maturities like 3 month T-Bills, as they are a safe haven play to stash money. From the technical picture, the chart is content to hang out near the highs (low yield mark) but cannot take it out. The downside (selling) has been limited as well with the regression line since October supporting the market as well as the 8 and 21 day moving averages. We call this a goldilocks market, not to hot, not to cold, but just right. Really, the market is marking time, ready to grab a turkey leg and a cold one.
Really, the market is marking time, ready to grab a turkey leg and a cold one
November 24, 2009|Austin Mortgage Market|
About the Author: Max Leaman Austin Mortgage
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