Mortgage Rates

Mortgage Rates Recover A Portion Of Friday's Weakness Mortgage Rates bounced back into slightly lower territory after rising abruptly on Friday afternoon. Thursday and Friday of last week marked the biggest 2-day move higher in rates since March, but unlike then, the current move took place very close to all-time lows on Wednesday. We begin the week in stronger territory in terms of markets, but with lenders still slightly hesitant to pass along all of the improvement to rate sheets. Nevertheless, Best-Execution for 30yr Fixed Conventional loans remains at 3.5% with some of the best-priced lenders still close to 3.375%. Part of the "long term guidance" section below discusses "going with the flow of gradually lower rates until we see the pattern definitively break." Friday was the first major risk of such a definitive break since early June. If rates were higher again today, we may well have been discussing a break and be changing the ongoing guidance to a more cautious tone. As it stands, we're still well within the scope of the long-term trend, but that doesn't mean that it will necessarily be a long time between now and the next threat to the pattern. The best candidates for confirming or changing the prevailing pattern of "low and sideways" will arrive in the last 3 days of the week with important central bank announcements at home and abroad, as well as the important Employment Situation Report on Friday. The frustrating thing about this week's big-ticket events is that Wednesday might make it look like we're heading one direction and Thursday might completely reverse that move.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Building Strong, Lasting Relationships; One Client at a Time. Friday, July 27, 2012 Global markets continue to focus on the comments yesterday from the President of the ECB; Draghi’s remark that the ECB is ready to use its firepower to print money to underpin the euro currency by re-starting purchases of EU member debt. He signaled central bank officials are prepared to do whatever is needed to ensure the euro’s survival and act on surging bond yields. ‘‘Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,’’ Draghi said during a speech in London yesterday, adding the comment ‘‘And believe me, it will be enough.’’ That very forceful quote is presently increasing optimism that next week at the ECB meeting the bank will re-start its Securities Markets Program, buying sovereign debt from the troubled countries in the Union (Spain and Italy along with Greece. Draghi’s speech yesterday was the most direct and psychological remark from anyone in the EU in recent weeks. Now he has to deliver, the risk in doing so is alienating key policy makers on the ECB council, such as Bundesbank President Jens Weidmann. The Bundesbank reiterated its opposition to bond purchases today. The US and Europe equity markets rallied yesterday and are continuing to gain this morning. The US 10 yr note yield closed at 1.40% Wednesday, this morning at 1.48%. Mortgage rates also edging higher the last three days. Markets were extremely negative about the impact on global growth, for weeks there was nothing coming from any official Europe as the euro currency fell and interest rates in Spain and Italy increased to levels that the two countries couldn’t meet future payments. Q2 advance gross domestic product, the value of all goods and services produced, rose at a 1.5% annual rate after a revised 2% gain in the prior quarter (previously +1.9%). Forecasts were for Q2 GDP at +1.2% to +1.4%. The GDP estimate is the first of three for the quarter, with the other releases scheduled for August and September when more information becomes available. The Commerce Debt also revised GDP data going back to 2009; GDP grew 2.5% in the 12 months after the contraction ended in June 2009, compared with the 3.3% gain previously reported, the final quarter of last year was revised up to a 4.1% gain the fourth quarter gain was previously reported as 3%. At 9:30 the DJIA opened +24, NADSAQ +14, S&P +5. The 10 yr note at 9:30 at 1.48% +4 bp, 30 yr MBSs -24 bp frm yesterday’s close; 15 yr MBSs -12 bp. The U. of Michigan consumer sentiment index, expected at 72.0, increased to 72.3. The index based on the month end final reading is the lowest since last Dec when compared to the end of the month index. Next week is shaping up to be one of key weeks in months. The ECB meeting, the Bank of England meeting and the Fed’s FOMC meeting. Three key banks talking of potential easing moves. The Fed is expected to launch another easing move purchasing treasuries and mortgage-backed securities. The ECB meeting will focus on Draghi’s comments and either reject it or confirm with stimulus of bond buying. The US rate markets are seeing unwinding of some of the safety moves into treasuries sending the 10 yr down to 1.39%, now at 1.48%. Mortgage rates moving in tandem with the note as rates are increasing. The 10 yr, driver for mortgage rates, is testing its 20 day moving average; there have been only two days since early last April that the 10 yr yield traded above it, each time the yield fell back under the 20 the following day. The various technical studies we use are still holding but have weakened this week on the optimism about Europe. The surprise statement from Draghi has taken a lot of wind out of the bond and mortgage markets at the moment.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Building Strong, Lasting Relationships; One Client at a Time. Friday, July 27, 2012 Global markets continue to focus on the comments yesterday from the President of the ECB; Draghi’s remark that the ECB is ready to use its firepower to print money to underpin the euro currency by re-starting purchases of EU member debt. He signaled central bank officials are prepared to do whatever is needed to ensure the euro’s survival and act on surging bond yields. ‘‘Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,’’ Draghi said during a speech in London yesterday, adding the comment ‘‘And believe me, it will be enough.’’ That very forceful quote is presently increasing optimism that next week at the ECB meeting the bank will re-start its Securities Markets Program, buying sovereign debt from the troubled countries in the Union (Spain and Italy along with Greece. Draghi’s speech yesterday was the most direct and psychological remark from anyone in the EU in recent weeks. Now he has to deliver, the risk in doing so is alienating key policy makers on the ECB council, such as Bundesbank President Jens Weidmann. The Bundesbank reiterated its opposition to bond purchases today. The US and Europe equity markets rallied yesterday and are continuing to gain this morning. The US 10 yr note yield closed at 1.40% Wednesday, this morning at 1.48%. Mortgage rates also edging higher the last three days. Markets were extremely negative about the impact on global growth, for weeks there was nothing coming from any official Europe as the euro currency fell and interest rates in Spain and Italy increased to levels that the two countries couldn’t meet future payments. Q2 advance gross domestic product, the value of all goods and services produced, rose at a 1.5% annual rate after a revised 2% gain in the prior quarter (previously +1.9%). Forecasts were for Q2 GDP at +1.2% to +1.4%. The GDP estimate is the first of three for the quarter, with the other releases scheduled for August and September when more information becomes available. The Commerce Debt also revised GDP data going back to 2009; GDP grew 2.5% in the 12 months after the contraction ended in June 2009, compared with the 3.3% gain previously reported, the final quarter of last year was revised up to a 4.1% gain the fourth quarter gain was previously reported as 3%. At 9:30 the DJIA opened +24, NADSAQ +14, S&P +5. The 10 yr note at 9:30 at 1.48% +4 bp, 30 yr MBSs -24 bp frm yesterday’s close; 15 yr MBSs -12 bp. The U. of Michigan consumer sentiment index, expected at 72.0, increased to 72.3. The index based on the month end final reading is the lowest since last Dec when compared to the end of the month index. Next week is shaping up to be one of key weeks in months. The ECB meeting, the Bank of England meeting and the Fed’s FOMC meeting. Three key banks talking of potential easing moves. The Fed is expected to launch another easing move purchasing treasuries and mortgage-backed securities. The ECB meeting will focus on Draghi’s comments and either reject it or confirm with stimulus of bond buying. The US rate markets are seeing unwinding of some of the safety moves into treasuries sending the 10 yr down to 1.39%, now at 1.48%. Mortgage rates moving in tandem with the note as rates are increasing. The 10 yr, driver for mortgage rates, is testing its 20 day moving average; there have been only two days since early last April that the 10 yr yield traded above it, each time the yield fell back under the 20 the following day. The various technical studies we use are still holding but have weakened this week on the optimism about Europe. The surprise statement from Draghi has taken a lot of wind out of the bond and mortgage markets at the moment.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Building Strong, Lasting Relationships; One Client at a Time. Thursday, July 26, 2012 The US and global stock markets rallying hard early this morning on comments from ECB Pres. Draghi saying policy makers will do whatever it takes to preserve the euro. Markets continue to react on any comments from any official in Europe; Draghi’ s comment this morning just one more snippet that in one way or another has been said before. What else would he be expected to say? Nevertheless it is moving markets. He signaled central bank officials are prepared to do whatever is needed to ensure the euro’s survival and act on surging bond yields. His comments came as Spanish policy makers called on the central bank to fight a renewed bout of financial turmoil that pushed the yields on Spain’s bonds to euro-area records this week. He said high yields on sovereign debt was within the central bank’s mandate. German bunds declined as his comments damped demand for the region’s safest assets, and US bond and mortgage markets also weaker. Talk is cheap, we have heard this for two years but in the end nothing has happened, can’t fight the emotions though, and this morning they are running on high levels. The euro currency rallying on the comment. Europe continues to dominate all global financial markets. Whatever is said seems to be considered the last word. The Draghi comment today that the euro will be saved drove Spain’s and Italy’s bond markets down in yield. The problems in Europe are ones of solvency not liquidity, what can the ECB do to alleviate the debt crisis that is increasing? Spain needs more money, Italy needs more money, Greece needs more money----and on and on. Today Draghi is saying the ECB will do whatever is necessary to save the EU, according to Draghi it is within the ECB authority to do what is necessary, but it is all about debt and insolvent countries. The way out would be for the ECB to begin buying much of the debt from Spain and Italy and other debt ladened countries. What has changed in the last six months; the ECB ceased purchases in February amid concern from some officials that it was a form of monetary financing, which is prohibited under the institution’s founding treaty? Weekly jobless claims this morning were down 36K to 363K, the decline much more than 6K expected. Last week’s claims revised from 386K to 399K. Headlines look good but claims these days are being distorted by the annual auto makers change over, we don’t take claims in July as representative of the true claims picture. That said, it’s all about the headline regardless of the specifics and details. June durable goods orders were expected to be up 0.%, orders as reported jumped 1.6% however the more important ex transportation orders were down 1.1%. Aircraft orders tend to be volatile, markets look more at the ex-transportation data. At 10:00 the NAR reported June pending home sales, expected up 0.9%; sales fell 1.1%; yr/yr +9.5%. The NAR blames the lack of inventory for the decline, saying banks should put more properties on the market. This is the third June sales report that were weaker than expected (new and existing sales the other two). At 9:30 the DJIA opened +149, NASDAQ +47, S&P +17. The 10 yr note at 1.42% +2 bp, MBS prices on 30 yr mtgs down 8 bp frm yesterday’s close, 15 yr mtgs -3 bp At 1:00 this afternoon Treasury will auction $29B of 7 yr notes to complete this week’s $99B borrowing. Yesterday’s 5 yr note didn’t see the demand that the 2 yr saw on Tuesday. Looking ahead; next week on Wednesday the FOMC meeting policy statement, Thursday brings the ECB policy meeting and the Bank of England’s policy meeting. What will the central banks do to attempt to fuel the declining global economy? The Fed is expected to launch anther easing move, the questions are when and what? Some are expecting a move by the Fed next week while an equal number of analysts are looking to the Sept meeting for the Fed to act. It isn’t will they, it’s what will the Fed do and when. Talk of lowering the FF rate to zero to motivate banks to lend instead of leaving reserves at the Fed; more Treasury buying, and a big increase of MBS buying. We continue to believe interest rates will decline from current levels but with some increase in interday volatility as seen so far this morning. Central banks will step up easing moves. Whatever the banks do though won’t likely help economies. In the US the tax cuts at the end of the year will likely be extended but how long before the entire tax problem is faced next year. The SS payroll cut also will expire. Small businesses face the health care issue as well as the other uncertainties and won’t likely hire under those clouds.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Building Strong, Lasting Relationships; One Client at a Time. Treasuries and mortgages starting a little weaker this morning after the drop in prices yesterday afternoon when the stock indexes rallied off the lows seen yesterday morning. The DJIA traded down 200+ points yesterday morning, but cut the loss by half at the close to -101. The rate markets do what they do, when stock indexes improve it takes yields a little higher. This morning in pre-market trade the stock indexes were fractionally better with the bond and mortgage markets weaker. Yesterday mortgage prices drifted lower in the afternoon as the stock market cut losses. Late yesterday Moody’s lowered the outlooks on the Aaa credit ratings of Germany, the Netherlands and Luxembourg, citing the “rising uncertainty” about Europe’s debt crisis. This morning the German 10 yr bund is trading about 7 bp higher at 1.25% contributing to the higher yield on the US 10 yr note. Moody’s didn’t downgrade the Aaa rating on German debt but said the outlook has weakened as Europe’s debt crisis continues to grow. The ratings company cited the risk that Greece will leave the 17-nation euro currency and the “increasing likelihood” of collective support for European countries such as Spain and Italy, according to a statement. German manufacturing and services output contracted in July more than economists had forecast. An index based on a survey of purchasing managers in the manufacturing industry declined to 43.3 this month from 45 in June, London-based Markit Economics said in a report. Economists had predicted a reading of 45.1. The measure of Germany’s services industries slipped to 49.7 from 49.9. Economists had projected 50. At 9:30 the DJIA opened +3, NASDAQ +5, S&P +1. The 10 yr note -8/32 at 1.45% +1 bp; mortgage prices -3/32 (.09 bp) frm yesterday’s close. The only data today; the May FHFA housing price index expected +0.3% The Federal Reserve plans to buy as much as $2B of Treasuries due from February 2036 to May 2042 today as part of a program known as Operation Twist. This afternoon at 1:00 Treasury starts the monthly auctions of 2s, 5s and 7s. The total unchanged from previous months, $99B; 2 yr and 5 yr $35B each, the 7 yr note $29B. Demand for the 2 yr should be strong. The market is expecting good demand for the auctions, if it is weak look for the rate markets to edge higher in yield. The 10 yr note fell to 1.41% early yesterday morning with mortgage prices nicely higher, by the end of the session however the 10 yr moved back up to 1.44% and mortgage prices while still higher on the session were lower than at 9:30. This morning the negative outlook Moody’s did on Germany yesterday put some pressure on German rate markets, the move higher on German 10 yr bunds is forcing US interest rates higher even with the stock market, after opening a little better by 10:00 trading weaker. The 10 yr note is back to 1.46%, what was resistance is now a minor support level.

Mortgage Rates

Mortgage Rates Anthony Hood Equity Investment Capital Office: 949-891-0067 Email: tony@equityinvestmentcapital.com website: www.equityinvestmentcapital.com Building Strong, Lasting Relationships; One Client at a Time. The Europe debt crisis is back with a major sell-off in US and global equity markets, and a move into US treasuries pushing the bellwether 10 yr note and mortgage rates to new historical lows. This week Greece’s troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund will descend on Greece to review the debt crisis I the country. There is now concern that Greece will fall into depression similar to the US depression in the 30s, and an increasing concerns Greece will exit the EU. It shouldn’t be a shock to markets, there is little chance Greece can survive in the EU, nevertheless after a couple of weeks with not much out of the region it is now back with renewed fears. The reaction is sending US interest rates to record lows and the stock market down hard this morning. After euro finance ministers failed to staunch a decline in the single currency with the approval of a 100 billion-euro ($122 billion) aid package for Spanish banks last week, the 3 governing bodies will seek to determine the fiscal state of Greece where the crisis began almost three years ago. The euro currency is crumbling setting new lows against the dollar and the Japanese yen. The euro slipped below its lifetime average against the U.S. dollar art $1.2080. The market consensus now is that Greece will not be able to meet the requirements set out when it got bail-out money. Germany over the weekend said it will not agree to reworking the Greek bailout plan. “If Greece doesn’t fulfill those conditions, then there can be no more payments,” German Vice Chancellor Philipp Roesler told the media yesterday, adding that he is “very skeptical” Greece can be rescued and that the prospect of its exit from the monetary union “has long ago lost its terror.” The repercussions over Greece has sent Spain’s 10 yr note to a record 7.48% this morning up about 30 basis points in the last couple of days. Italy’s cost of borrowing also increasing to levels that will add more problems for it getting more money to fend off another crisis. Spain is next up for the rolling crisis. At 9:30 the DJIA opened -179, NASDAQ -63, S&P -20. The 10 yr note at 9:30 at 1.42% -4 bp and mortgage prices up 6/32 (.18 bp). The renewed concerns over the debt crises in Europe will support the bond and mortgage markets this week. However, although this morning the fear factor and concerns are at high levels, we have experienced this many times in the last couple of years. Markets will react on any comments out of the region. While Greece in the wider perspective is finished in the EU, momentary comments from the IMF, the ECB or the EU that sound more optimistic will get traders’ attention with market swings that could be severe similar to what we are seeing this morning. That said, technically the bond and mortgage markets are increasing their bullish bias. Expect the possibility of volatile markets this week.

Mortgage Rates

Mortgage Rates Treasuries and mortgage markets opened a little better this morning with US and Europe’s stock markets weaker. Today there is no data scheduled and none on Monday. Trade today should be rather quiet with nothing to trade from. Treasuries are higher (prices), with five-year yields falling to record lows, on concern a $122 billion bank rescue plan for Spain approved by European finance ministers may not be enough to halt the sovereign-debt crisis. In Europe Spain’s 10-year bonds fell for a seventh day, increasing the extra yield investors demand to hold the securities instead of German bunds to the most on record, amid concern slowing growth will worsen Europe’s debt crisis. German bunds extended a third weekly gain after a report showed producer prices in Europe’s largest economy declined more in June than economists forecast. Germany’s two-year yields were less than zero for an 11th day before a survey next week that economists said will show euro-area consumer confidence worsened for a second month in July. German producer prices declined 0.4 percent last month, after dropping 0.3 percent in May, the Bundesbank said in Frankfurt. Prices were forecast to fall 0.2%, according to a Bloomberg News survey of economists. The DJIA opened -75, NASDAQ -13 and the S&P -7. The 10 yr note at 9:30 1.47% -4 bp; 30 yr mortgage price +4/32 (.12 bp). A nice move for treasuries but MBS prices lagging so far this morning. The 10 yr testing the 1.46% resistance level again. If the 10 yr closes under 1.46% the yields will likely continue to fall, if not the tight trading range will continue with little change in interest rate markets. Interest rates are trading in a narrow range ahead of the idea that the Fed will ease again. The issue is not about another easing, it’s when it will come. We don’t think the FOMC meeting at the end of July will announce an ease, presently, given how US markets are trading most are looking for an easing in Sept. Much of it will depend on the July employment report which won’t be known until August 3rd and after the FOMC meeting on July 31st and August 1st.

Mortgage Rates

Mortage Rates 8:30 June housing starts jumped a huge 6.9% to 760K units (annualized); building permits however were lower, -3.7% to 755K units. Starts were widely expected to increase 4.7% while permits were expected +1.9%. Better than expected but didn’t change the trade in stock index futures that pointed to a lower 9:30 open. The pace of home starts was the fastest since October 2008. Construction of single-family houses increased 4.7% to a 539,000 rate, the fastest since April 2010, from 515,000 a month earlier, today’s figures showed. Work on apartment buildings and other multifamily units climbed 12.8% to an annual rate of 221,000 in June from 196,000 a month earlier. These days everyone is searching for any positive news about the economy, housing sales are slowly increasing and construction improving, but from levels that are some of the lowest in decades. Federal Reserve Chairman Ben S. Bernanke, in testimony yesterday to Congress, indicated the industry was on the mend. Later this afternoon (2:00 pm), the Fed will release its Beige Book survey of business conditions in 12 U.S. districts today, two weeks before the Federal Open Market Committee meets to set monetary policy. The U.S. economy was described as growing at a “moderate pace” in the Fed’s June Beige Book survey. Since the June Book most measurements of the economy have shown increased weakness. The Book should add more details and will get plenty of attention with many now looking for the Fed to launch another easing move. The next FOMC meeting is July 31st and August 1st. There is no conviction of substance at the moment that the Fed will ease at the meeting, yet there is a lot of belief the Fed will ease---when is the question. The meeting will be before the July employment report that won’t be reported until August 3rd. Ben Bernanke will return to Congress at 10:00 this morning this time at the House Financial Services Committee. Yesterday at the Senate he was treated more congenially than he will be at the House. His prepared text yesterday will be the same, it will be Q&A that may light some lights, nevertheless he isn’t likely to change is outlook or be more specific as to what the Fed will do. Congress is completely dead, the President is dead, in terms of providing fiscal stimulus so members expect the Fed to do something; even if another easing isn’t likely to improve the economic outlook much. If (when) the Fed eases there will likely be an emphasis on buying MBSs to keep mortgage rates down. Good idea, but while mortgage rates decline regulators are going in the opposite direction with things like the new disclosure forms that reduces consumers’ choices. Credit is tight and that is not likely change any time soon. At 9:30 the DJIA opened -48, NASDAQ -5, S&P -4. The 10 yr note +10/32 at 1.48% -3 bp; mortgage prices +4/32 (.12 bp) frm yesterday’s close. Technically the US rate markets remain positive but most rates have stalled after the recent rally that took the bellwether 10 yr note from 1.68% on July 2nd to 1.48% this morning. The note has found resistance at 1.46% on a closing basis, it did fall to 1.45% on Monday but it didn’t hold and since then has held steady. Mortgage markets paint the same picture, outlook good but rates have stalled. We don’t expect interest rates to increase as long as the view of another easing dominates as it does today; if the Fed were not to ease then rates will edge higher unless Europe’s debt crisis becomes more worrisome.

Mortgage Rates

Mortgage Rates Interest rate markets opened generally unchanged this morning with early trade in stock indexes pointing to a little better open at 9:30. Europe’s stock market higher this morning. Spanish stocks and bonds gained after EU finance chiefs agreed to make available 30 billion euros by the end of this month. The goal is to eventually use the euro-area bailout fund to recapitalize banks directly instead of saddling the government with the debts. Eventually as much as 100 billion euros ($123B) in emergency loans will be needed to shore up Spain’s banks. Why should we care? Because Europe is leading the world these days, what happens in Europe’s debt problems spreads around the world. The one benefit is that US interest rates continue to fall aided by the fear factor; when (if) the fear subsides interest rates will have bottomed and begin to increase as billions of safety moves to US treasuries are unwound. The obvious negative is that Europe is dragging the global economy down, keeping unemployment levels high and growth declining. China’s imports rose less than anticipated in June, pushing the trade surplus to a three-year high and adding pressure on the government to support demand as the global economy slows. Imports increased 6.3% from a year earlier, the customs bureau said in a statement today in Beijing, compared with the 11% median estimate in a survey of 32 economists. Export growth slowed to 11.3% and the trade surplus rose to $31.7B. Germany’s Supreme Court is deliberating whether it is legal for Germany to participate in Europe’s bailouts. If the Court rules it illegal it is hard to imagine the Ponzi scheme of borrowing money from broke countries and lending it to other broke countries will survive for long. There are no scheduled economic reports due today; this afternoon Treasury will start its three auctions this week with $32B of 3 yr notes. Tomorrow $21B of 10 yr notes will likely keep the long end of the curve quiet and unable to improve much---that includes mortgage markets as well. The DJIA opened +69 at 9:30, NASDAQ +19 and the S&P +8; the 10 yr note at 9:30 -2/32 and mortgage prices +2/32 (.06 bp). The interest rate markets continue to fall; we believe the 10 yr note is likely to move to at least test its early June low at 1.47% (currently 1.52%); mortgage rates also will decline with treasuries. With US economic outlook being down-graded by the Fed and most economists, with continued high unemployment, the Fed will have to ease again in another QE. The FOMC meets at the end of the month with increasing thoughts it will announce the ease; if not then, then at the Sept meeting. Europe is nowhere near any significant plan and won’t likely find one anytime soon.

Mortgage Rate Update

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Mortgage Rate Update

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Mortgage Rates


Treasuries and mortgages doing a little better to start this week’s action. The 10 yr note +6/32 at 1.62% and at 9:30 30 yr mortgages +3/32 (.09 bp) frm Friday’s closes. The DJIA opened -16, NASDAQ -3.

The 4th falls in the middle of the week. Trading volumes should be thinner than usual with many taking a few days off. There are a number of key measurements this week; both June ISM reports (manufacturing today (see below) and services on Thursday), weekly claims on Thursday and the June employment data on Friday. The early forecast for the employment report, non-farm payrolls +100K and non-farm private jobs +105K with the unemployment rate unchanged at 8.2%.

At 10:00 two reports; the June ISM manufacturing data main index was expected at 52.2; as reported manufacturing in the U.S. unexpectedly contracted in June for the first time in almost three years, indicating a mainstay of the U.S. expansion may be faltering. The Institute for Supply Management’s manufacturing index fell to 49.7, worse than the most-pessimistic forecast in a Bloomberg News survey, from 53.5 in May. The ISM’s U.S. production index decreased to 51 from 55.6. The new orders measure dropped to 47.8, the lowest since April 2009, from 60.1, and the gauge of export orders declined to 47.5, also the lowest in three years, from 53.5. The employment gauge decreased to 56.6 from 56.9 in the prior month. The unexpected decline sent interest rates lower and stock indexes down frm pre 10:00 levels. May construction spending also at 10:00 was stronger than the 0.2% expected, increasing 0.9%.

Europe’s economy is showing increasing signs of weakness after stalling in the first quarter as the worsening fiscal crisis erodes the confidence of executives and consumers. The gauge of euro-region manufacturing held at 45.1 in May, London-based Markit Economics said today in a final estimate. That compares with an initial estimate of 44.8. A reading below 50 indicates contraction. The European Central Bank’s governing council gathers in Frankfurt on Thursday with speculation officials will lower their benchmark interest rate by at least 25 points to a record low of 0.75% as the economy hovers near recession.

A purchasing managers’ index for China fell to 48.2 in June from 48.4 in May, HSBC Holdings Plc and Markit said today. A similar measure released by the government yesterday also slid. The purchasing managers’ index released yesterday by the Beijing-based statistics bureau and China Federation of Logistics and Purchasing fell to 50.2 in June from 50.4 in May. The data showed inflation pressures waning, a slump in export orders, a lack of domestic demand and a “modest” decline in the size of the manufacturing workforce. The gauge of export orders in the federation’s index contracted for the first time since January.


The US 10 yr note and 30 yr mortgage rates continue to trade in their respective narrow ranges; both are holding within five week ranges but there is an increasing belief Europe won’t drive safety moves into US treasuries as strongly as the last eight months. One of key reasons US rates have stayed low is due to investors parking money in the safest places as Europe wrestles with how to save banks and cut spending.