RATES CONTINUE MODEST DECLINE ON HOPES FOR A "SOFT LANDING" FOR ECONOMY
[Lenny Holler, Preferred Empire Mortgage Company] 9/05/06
Friday's employment report showed a steady U.S. labor market and along with other reports showing solid manufacturing activity and consumer spending and a slight upward revision to 2nd quarter GDP provided the economic positives for the week. Weaker housing reports and consumer confidence provided the negatives. On balance, fears of an impending recession have diminished but fears of future inflation have also diminished. The feeling in the market appears to be that the U.S. economy is headed for a soft landing where the slowdown will not be so dramatic that it harms consumers or turns into a recession. With oil prices closing below $70 per barrel, the stock and bond markets have continued to rally and mortgage rates have held at around 0.5% below their highs of 2 months ago.
As far as next week goes the Federal Reserve releases its Beige Book on Wednesday, providing an overview of economic conditions in the 12 Federal Reserve districts. The book will figure in the Federal Open Market Committee's rate-setting deliberations on September 20 (in which it is widely believed that the Fed will continue to hold rates steady). Other reports include the ISM Non-Manufacturing Index and second-quarter productivity and costs (both on Wednesday) and the Fed's consumer credit report (on Friday).
· 10 year treasury yield down for the week from 4.78% to 4.72%. 2 year treasury down from 4.86% to 4.76%.
· Oil down for the week from $72.51 per barrel to $69.19. Gold up from $622.00 per oz. to $624.40.
· The dollar was down versus the yen from 117.30 to 117.11 and the Euro was up against the dollar at $1.2839 from $1.2756.
· Stocks were up for the week (S&P500 up 1.23%, Dow Jones up 1.60% and Nasdaq up 2.47%).
Friday's employment report showed a steady U.S. labor market and along with other reports showing solid manufacturing activity and consumer spending and a slight upward revision to 2nd quarter GDP provided the economic positives for the week. Weaker housing reports and consumer confidence provided the negatives. On balance, fears of an impending recession have diminished but fears of future inflation have also diminished. The feeling in the market appears to be that the U.S. economy is headed for a soft landing where the slowdown will not be so dramatic that it harms consumers or turns into a recession. With oil prices closing below $70 per barrel, the stock and bond markets have continued to rally and mortgage rates have held at around 0.5% below their highs of 2 months ago.
As far as next week goes the Federal Reserve releases its Beige Book on Wednesday, providing an overview of economic conditions in the 12 Federal Reserve districts. The book will figure in the Federal Open Market Committee's rate-setting deliberations on September 20 (in which it is widely believed that the Fed will continue to hold rates steady). Other reports include the ISM Non-Manufacturing Index and second-quarter productivity and costs (both on Wednesday) and the Fed's consumer credit report (on Friday).
· 10 year treasury yield down for the week from 4.78% to 4.72%. 2 year treasury down from 4.86% to 4.76%.
· Oil down for the week from $72.51 per barrel to $69.19. Gold up from $622.00 per oz. to $624.40.
· The dollar was down versus the yen from 117.30 to 117.11 and the Euro was up against the dollar at $1.2839 from $1.2756.
· Stocks were up for the week (S&P500 up 1.23%, Dow Jones up 1.60% and Nasdaq up 2.47%).
posted by rjgny2004 at 12:41 PM
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