Sunday, August 16, 2009

Quick Weekly Update

The last four weeks have been a boom for the equity markets while the fixed income markets have taken it in the mouth. In it's wake, bond and fixed income markets have retreated to levels no seen in 6 months. While we may have been oversold, I believe the run up is overdone and has very little supporting data suggestiong our economy is headed in the right direction.

Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis

Mon. Aug. 17

Tues. Aug. 18, 8:30 a.m. ET
July Housing Starts & Building Permits
Up 3.0% Up 1.7%
If the consensus estimates prove accurate, this data will likely cause interest rates fractionally higher. There is an outside chance both of these values will fall into negative territory as rising unemployment, higher interest rates, and stiffer underwriting standards combined to take a toll on demand. If so, the prospects for a near-term move to fractionally lower rates will brighten considerably.

Tues. Aug. 18, 8:30 a.m. ET
July Producer Price Index Core Rate
-0.3% vs. last +1.8% +0.1% vs. last +0.5%
The overall index probably fell as energy and food prices posted significant declines during the month. The modest increase in the core rate of the producer price index shows that inflation pressure at the wholesale level remains exceptionally benign.

Wed. Aug. 19
Thurs. Aug. 20, 8:30 a.m. ET
Initial jobless claims for the week ended 8/15 Down 3,000
Initial weekly jobless claims remain stubbornly high.

Thurs. Aug. 20, 10:00 a.m. ET
July Leading Indicators
+0.6% vs. last +0.7%
This forward looking indicator of growth in the economy is expected to show an improving outlook for growth six months down-the-line. If so, this report will likely exert some modest upward pressure on fixed income rates with the equity markets taking the benefit of this report.

Fri. Aug. 21, 10:00 a.m. ET
July Existing Home Sales
Up 2.5%
Large volumes of distress sales, improved homebuyer sentiment, and a slowly stabilizing economy are supportive factors. Should we see a solid advance for existing home sales, the equity markets should rally with a large percentage of the brunt force being applied to to the bond and fixed income markets.

Fri. Aug. 21, 10:00 a.m. ET
Fed Chairman Bernanke speaks on “Reflections on a Year of Crisis,” at a Fed conference in Jackson Hole, Wyoming Market participants will be listening intently to Mr. Bernanke’s presentation to see what he has to say about the tricky task of gradually turning off the tap of the government’s massive economic stimulus initiatives. The Fed Chairman is unlikely to add anything beyond what was included on this subject in the written statement released following last week’s Fed meeting. If this assessment is accurate, this will be a non-event in terms of its influence on the trend trajectory of mortgage rates

Mon. Aug. 24