Rate markets started fractionally better this morning with a little weakness in the stock index futures markets. At 8:30 the preliminary Q4 GDP was revised from +5.7% on the advance report last month to +5.9%, generally in line with forecasts. The Q4 price index +0.4% revised from +0.6%; no inflation to worry about. The consumption index (core) Q/Q up 1.6%. Most of the increase in Q4 GDP came from inventory builds, still not much from consumers. Not much reaction to the data in the bond market but the stock indexes declined slightly from before the GDP data.  

At 9:45 the Feb Chicago purchasing mgrs index, expected at 59.0, hit at 62.6 frm 61.5 in Jan. The headline was better but the guts were softer; new orders at 62.2 frm 66.4, prices pd at 67.7 frm 66.2 and employment declined to 53.0 frm 59.8 in Jan. Any index read over 50 is considered expansion. Not much reaction to the data.

At 9:55 the U. of Michigan consumer sentiment index, expected at 74.0, was 73.6 with the expectations index at 68.4 frm 70.1 in Jan. Markets breathed a sigh of relief on the report based on the huge decline ion the consumer confidence index on Tuesday (46.0 frm 56.5) that drew concern that Feb employment would be weak. The sentiment index is volatile as is the confidence data, nevertheless the economic outlook this week is being re-thought. Although markets remain bullish questions are increasing.

At 10:00 Jan existing home sales, expected to be up 1.0%, were down 7.2%; the inventories increased to 7.8 months supply from 7.2 months in Jan. The median sales price unchanged from Jan at $164.700.00. The housing sector is not strong and the recovery being touted by most is so minor and based on the worst situation when the 2008 economy collapsed. On Wed Feb new home sales were expected to be up 3.7% but fell 11.2%. No indication the housing sector has improved much. The result of the decline sent stock indexes that were unchanged down 46 points on the DJIA.

A nice rally yesterday on the jump in weekly jobless claims and one more pledge by Bernanke that the Fed will leave interest rates low for a long time given the questions about the economic recovery. It seems markets need to hear Bernanke say it about once a week. The economic data this week has some now questioning the economic growth in 2010; still most believe the economy will grow albeit slowly, the real question is how slowly? The rate markets are going to end the week with nice declines in rates in the Treasury markets, partly on weak economic data and partly on continued concerns on Greece's debt problems moving investors to safety in treasuries. Concern that Greece's credit ratings will be cut boosted demand at a $32 billion auction of U.S. seven-year securities yesterday.

Nothing left today on the schedule; the rest of the day for the bond and mortgage markets will depend on the depth of decline in the stock market.  

From Freddie Mac 

Long-Term Rates Rise to Over 5 Percent for the First Time in Three Weeks

 

For Immediate Release   McLean, VA - Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 5.05 percent for the week ending February 25, 2010, up from last week when it averaged 4.93 percent. Last year at this time, the 30-year FRM averaged 5.07 percent.

The 15-year FRM this week averaged 4.40 percent  up from last week when it averaged 4.33 percent. A year ago at this time, the 15-year FRM averaged 4.68 percent.

"Interest rates for 30-year fixed mortgages followed long-term bond yields higher and rose above 5 percent this week amid a mixed set of economic data reports" said Frank Nothaft, Freddie Mac vice president and chief economist. "For instance, the January producer price index jumped well above the market consensus, but the consumer price index remained subdued and consumer confidence declined to the lowest level since April 2009, according to the Conference Board.

"There were also varying reports as to the current state of the housing market. The S&P/Case-Shiller® national home price index rose for the third consecutive quarter in the fourth quarter, albeit at a slower rate, and the 20-city composite index showed an increase in December 2009 for the seventh month in a row; six metropolitan areas experienced positive year-over-year growth, compared to four in November. New home sales, however, unexpectedly slowed in January to the smallest pace since records began in 1963, and the supply of homes at the current sales rate rose to 9.1 months, the most since May 2009."

Thursday February 25, 2010

Initial Jobless Claims were 496,000 - above consensus and previous.  Durable Goods was up overall but down ex-trans.  The message is clear - business is not investing in enough to create jobs.  The overall message this week is dismal:  lack of Consumer Confidence, low Home Sales, high jobless and little investment in durables.  Investors lack the confidence to invest.  Job creation will come from business not government.  The role of the government (apart from government jobs) should be finding ways to help business create jobs.  Possibilities are fiscal incentives (tax credits) and a loosening of laws and regulations.

Wednesday February 24, 2010

New Home Sales: Actual 309K, consensus 354K, previous 348K (annualized).  This is a record low for New Home Sales. Ugly data helps Treasuries and could drive mortgage rates lower.  Bernanke is testifying before the House Financial Services Committee and said that "The FOMC continues to anticipate that economic conditions -- including low rates of resource utilization, subdued inflation trends, and stable inflation expectations -- are likely to warrant exceptionally low levels of the federal funds rate for an extended period."

If you want to listen to more hard-line monetary economists they are preaching that the Fed must start to increase rates now. These folks want to prevent future bubbles, serious inflation and in the worst case the inflationary collapse of the dollar.

Feb 25 2010 7:58am EDT Daily Brief - Portfolio.com

A Last Look at Hummer

 

The Hummer is oh-so-close to being a bygone symbol of American excess and collector's item.

On Wednesday, the Sichuan Tengzhong Heavy Industrial Machines Co. told General Motors it failed to get the necessary approval from the Chinese government to buy the Hummer brand. GM, which had been trying to offload the gas-guzzling line as part of its restructuring effort, then said the time had come to be done with Hummer once and for all.

''We are disappointed that the deal with Tengzhong could not be completed,'' said John Smith, GM vice president of corporate planning and alliances. ''GM will now work closely with Hummer employees, dealers and suppliers to wind down the business in an orderly and responsible manner.''

So before the Hummer vanishes completely, we wanted to take a last look at the brand. In 2008, Portfolio.com published an interactive called "Hummer by the Numbers." We're a bit obsessed here at Portfolio about numbers and applying a deep-dive on the Hummer provided some awe-inspiring comparisons. A Hummer, for example, weighs as much as 265 commuter bicycles and is as big as 13-and-a-half sub-zero refrigerators,