After falling over 100 points to start the day, US Stocks have turned positive. Mortgage Bonds are also slightly positive, but trading in a tightly constricted range.
Stocks responded negatively this morning to reports by UPS of a profit warning, and a statement from Dow Chemical that they expect to raise their prices by as much as 25%. UPS is considered a bellwether stock as less shipping business indicates lower sales, and economic weakness. Dow is perhaps the first large corporation to begin passing high costs of food & energy on to their consumers. Consumer Confidence for the month of June came in at the 5th lowest reading in it's history, and Case Shiller reported home prices dropped in all 20 of their major markets last month.
This weakness in the economy should be good news for Mortgage Bonds, and they began the day higher. However, Oil is pressing up against record pricing once again, and appears to be putting a lid on any major gains for the day. Today the US Treasury auctioned $30 Billion in 2 year notes, which did not sell particularly well, and is applying further resistance to Bonds.
Rates have remained fairly stagnant over the last 4 trading days, and there is no further news of any real impact due out until tomorrow's Fed decision, so I'm recommending to float for now.
Make it a great day!
Ron Brown
615 E Pioneer Ave.
Puyallup, WA 98372
(253) 520-0000
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