March 21st, 2011 9:42 AM by Lehel S.
Treasuries and mortgages opened weaker this morning. The stock indexes prior to the open were trading higher. Same story, if equities are better the rate markets will be softer. I Japan a couple of reactors are said to be closer to being controlled but now another reactor that had been stable is spewing out steam filled with radiation. In Libya the UN forces bombed Qaddafi forces over the weekend helping rebels but so far Qaddafi remains defiant and reports that he is taking citizens a human shields into his compound keeping UN forces from taking him out. Crude and gold are higher today on the Libyan situation.
European stocks rallied as Japan’s nuke crisis eased and American officials said its allies are in full control of Libya’s airspace following two days of airstrikes. U.S. index futures and Asian shares advanced. US stocks opening stronger on the same thinking, lemmings running again. No one actually knows a lot of detail about Japan's nuke problems, the government in Japan has never been completely forthcoming on problematic situations but at the moment it appears markets are relaxing a bit after panic equity selling erased all of the gains earned this year based on the S&P 500 index.
Oil is higher today on the Libyan and Mideast situations. Oil traders believe that Libya and the continual roiling in Mideast countries will lower supplies. Speculation in the oil markets isn't new, it has however reached another high water mark. Libyan output has fallen to less than 400,000 barrels a day; the country produced 1.59 million barrels a day in January, according to estimates. Libyan oil production halted by the country’s civil war is likely to remain suspended for the rest of this year according to some analysts. In the Mideast Bahrain’s government declared a three-month state of emergency on March 15 after troops from Saudi Arabia and other Arab Gulf states arrived to support the administration in quelling more than a month of protests. Yemen’s President Ali Abdullah Saleh fired his cabinet yesterday after the deadliest crackdown in two months of unrest led officials close to him to resign in protest. At least 46 people were killed and hundreds injured earlier this week as police and pro-regime gunmen shot at protesters in the capital.
The Fed announced that it will sell its $142B MBS portfolio it acquired in the financial meltdown from AIG. It intends to sell $10B a month as long as market conditions can handle it. The Fed believes it will make a profit on the sales.
At 9:30 the DJIA opened +150; the 10 yr note at 9:29 was -10/32, at 9:33 -19/32. Mortgage prices at 9:29 -4/32, at 9:33 -9/32 (.28 bp).
The only data today; at 10:00 Feb existing home sales expected down 4.5% down 9.6% to 4.88 mil frm 5.40 mil in Jan, Jan sales were revised up to +3.4% frm +2.7%. The median sales price $156,100.00 the lowest since Apr 2002 and -5.2% frm Feb 2010; there is an 8.6 month supply at present dales rate an increase of 3.5%. 39% of sales in Feb were distressed properties the highest since Apr 2009. Not a good report but it didn't phase the stock indexes, the DJIA actually improved after the report.
This week's Economic Calendar:
10:00 am FHFA housing price index (N/A)
7:00 am Weekly MBA mortgage applications (N/A)
10:00 am Feb new home sales (+1.0%)
8:30 am weekly jobless claims (-1K to 384K; continuing claims 3.70 mil frm 3.706 mil)
Feb durable goods orders (+1.1%; ex transportation +1.8%)
8:30 Final Q4 GDP (+2.9% frm 2.8% on the prelim last month)
9:55 am U. of Michigan consumer sentiment index (68.0 frm 68.2 at mid-month)
Economic data always is critical but now with the Japanese, Mideast and Libya issues traders are focusing more on those issues in terms of near term trading.
Lenders that set morning prices prior to 9:30 this morning are already contemplating re-pricing lower. Mortgages and treasures continue to decline as the stock market works higher.