Last week got a little ugly mid week when we saw one of the bigger 1 day sell offs in a quite some time. this sell off stemmed off of a poorly bid 5 year auction that filtered it's way through the credit markets. Luckily we saw things flatten out on Thursday and gain a bit of ground back on Friday. Over all we lost 14/32nds on Fannies for the week, much better than the 28/32nds we lost on Wednesday alone!
There continues to be fears in Europe with a close watch on both Greece and Portugal. Problems there will certainly filter their way through the global economy.
This week has it's share of data to contend with, here is this week's Calendar:
- MondayMarch 29: February Personal Income, Spending and PCE index. The estimate was for +.2, +.3 and +.1. The actually report came in a bit weaker than anticipated. Ahead of the number Fannies were trading off a bit, after the report we gained a bit of ground and than settled back to even.
- Tuesday, March 30: March Consumer Confidence anticipated to be 50.0. This is a good news number showing a big bounce back from last month. Keep in mind that good news is BAD news for interest rates. As reported we should be ok, but strength in the economy is likely to cause rates to bump up.
- Wednesday March 31: February Factory orders anticipated +0.5%. Not a market mover... I see this improvement as rebuilding depleted inventory, and not much more.
- Wednesday: This is the last day of the month. Uncle Sam says they are stepping out of the Mortgage business and it is possible we will see a bit of a sell off as we lose an investor in the market.
- Thursday April 1: April FOOLS DAY! This year is flying by too fast!
- Thursday: Initial jobless claims expected down 2,000. This puts the UE claims at 440,000 for the week, still a bad number.
- Thursday: March Institute of Supply Mgt expected 56.8. As forecast we have a small improvement over last month, this is anticipated and if it comes in close to expectations should not move rates.
- FridayApril 2: March nonfarm Payrolls expected to be +185,000 with the jobless rate at 9.7%. If this report matches expectations it will be the first time in 2 years we have seen positive job growth. Remember my Mantra: Good News is Bad News For Rates This good news report may cause a bit of a bump up in rates. If the report comes in weaker than anticipated it is possible we may see some improvement.
- Friday: Market closes at noon for the Holiday weekend.
- MondayApril 5: March Institute Supply Mgt Service index expected 53.5% This should be priced in and not effect the market.
This week has it's share of bumps, coming off of a shaky week being just one of them. Fridays Employment report is likely to be the biggie of the week, but may be trumped by a holiday shortened week. The other big unknown event will be the end of the month end of the Fed purchase of Mortgage Backed Securities. By the end of the Month Uncle Sam will have purchased approximately $1.25 TRILLION in mortgages, and that well has run dry. In typical supply and demand equation, if we have no demand we will see prices drop and yields climb.. Once that dust settles we will have all eyes on Friday's Employment report, it will need to be significantly weaker than estimated for rates to drop. As forecast it is a recipe for a strong stock market that will likely climb on the news and pull rates up with it.
It is a week to keep your seat belt securly fastened!
Have a wonderful week
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