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Friday, August 21, 2009

Morning Market Report

It's a fairly quiet morning in the markets however the three major indices are looking to make it four days in a row. Right now, all major indices are about about a half percent after things turned positive in Europe. There's plenty of economic data to digest. Yesterday, the weekly jobless numbers came out.

The number of first-time claims for unemployment benefits rose unexpectedly for the second straight week, a sign that jobs remain scarce even as other data show the economy is stabilizing.

Many economists expect the economy to grow at a modest pace in the second half of this year, bringing an end to the longest recession since World War II. But jobs are likely to remain scarce and many analysts worry that persistently high unemployment could cause consumers to hold back on spending, threatening a recovery.

The Labor Department said Thursday the number of new jobless claims rose to a seasonally adjusted 576,000 last week, from a revised figure of 561,000. Wall Street economists expected a drop to 550,000, according to a survey by Thomson Reuters.

It was the second week that new jobless claims rose. Meanwhile, this morning the July existing home sales come out this morning at 10:00 AM ET. Also, Fed Chairman, Ben Bernanke, will be speaking in front of Kansas City Fed Symposium.

Meanwhile, the stock market rally has not tempered the rally in Treasury bonds. The ten year U.S. Treasury is now at 3.42% continuing its near week rally. The yield spread is still about 2.43% between the two and ten year bond. Oil, on the other hand, has shown a massive rise over the last couple days. It's now trading at $72.54 per barrel. It's gained about $6 a barrel in the last three trading days.

The markets in the Far East were mixed. The Hang Seng in China was down .64%, the NIKKEI in Japan was down 1.4%, and the Straits Time Index in Singapore was down .57%. On the other hand, the Chinese index, a broader index from that country was up 1.69%.

In Europe things were all up, as I mentioned earlier. The FTSE in London was up 1.25%, the DAX in Germany was up 1.77%, and the Spanish index was up 1.38%. Those three lead every single European index up.

The Dollar looks weaker at the open against most of the major currencies. It's down by .57% against the Euro, it's down .32% against the British Pound and down .52% against the Yen.

Finally, a new survey from the Mortgage Bankers Association shows increases in dilenquencies.

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.24 percent of all loans outstanding as of the end of the second quarter of 2009, up 12 basis points from the first quarter of 2009, and up 283 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 64 basis points from 8.22 percent in the first quarter of 2009 to 8.86 percent this quarter.

This rate continues to set records and more importantly these delinquencies are now being driven by prime borrowers, or by those with good credit. So, while there are some signs that real estate is stabilizing, there are no sign that delinquencies and by extension foreclosures are leveling off. That, ultimately, means that real estate isn't really stabilizing.

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