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August 2009

Found 20 blog entries for August 2009.

Mortgage Bonds are near unchanged, but markedly improved from the worst levels seen early this morning.  Bonds continue to trade in a tight range between tough resistance at the 100-day Moving Average and underlying support at the 25 and 50-day Moving Averages.  

Stocks had an early boost this morning on news that bellwether Intel raised their future earnings target, as well as good earnings reports from Dell and upscale retailer Tiffany & Co.  The Dow has now closed in positive territory for eight consecutive days, for the first time since April of 2007.  Stocks are due for a pullback and when that happens Bonds should see some benefit.   

Inflation remained tame last month, as the Federal Reserve's preferred inflation gauge, the Core Personal

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Some surprising words from Richmond Fed President Jeffrey “The Dissenter” Lacker has applied selling pressure to the entire Bond market.  Lacker commented in an interview that the Fed may not need to buy the full $1.25T in Mortgage Backed Securities authorized for purchase by year end due to signs of improvement that have recently been reported in the housing sector.  Lacker’s opinions may not be shared by the other Fed members, and let’s remember that he is known as “The Dissenter”, as his views often are different than the Fed member consensus.  But just the thought of the Fed ending their buying support of Bonds was enough to shake out some of the weaker hands this morning. 

Mortgage Bonds closed yesterday against a strong triple layer ceiling of

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Mortgage Bonds are trading near unchanged levels and once again testing a stiff ceiling of resistance at the 100 and 200-day Moving Averages, as well as a falling trendline formed by recent highs. 

Yesterday, Bond prices enjoyed a late day rally sparked by good results from the 2-year Treasury Note auction.  Foreign investors, including foreign central banks, bought up a greater than expected 49.4% share of the offerings, compared to an average of 46% during the last four auctions.  While the increase in foreign buying is good news, we should remember that this is on 2-Year Treasury securities, which have a relatively short maturity period.  Short maturities are less risky, as the longer the maturity of the security, the more interest rate risk

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Mortgage bonds are a bit lower as stocks look to open higher, after it was announced that President Obama has reappointed  Ben Bernanke as Federal Reserve Chairman to a second 4-year term.  This looks to be a smart move as financial markets finally appear to be stabilizing.  It was a little less than a year ago that the credit markets were in disarray and fears of financial collapse spread worldwide.  Although Mr. Bernanke has his critics, and he has probably exerted his influence in areas far beyond those of past Fed chairs, he has many supporters that credit him with helping the United States step towards recovery.  President Obama's reappointment of Mr. Bernanke comes amid pressure and speculation from some Democrats, who would have rather seen current

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Mortgage Bonds are continuing lower after another failed attempt to break above the 100-day Moving Average on Friday.  At the moment, prices are now trading beneath all of their key moving averages...25, 50, 100 and 200-day, which will now serve as overhead resistance.  The next clear floor of support lies at the bottom of the trading range, about 70bp beneath current levels - so in the absence of bond friendly news or a stock market decline, pricing could continue to worsen before improving.

There are no economic reports due for release today, but the rest of the week will give investors a broad view of the economy with Durable Orders, Housing numbers, Gross Domestic Product (GDP), Core Inflation and Consumer Sentiment.  And if that were not enough,

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Mortgage Bonds are headed lower after touching a very strong ceiling of resistance at their 100-day Moving Average. 

Existing Home Sales were reported at 5.24M, better than expectations of 5M.  The inventory of unsold homes remained at a 9.4 month supply, still a lofty level but the best reading in a year.  The housing market continues to show signs of stabilization, and although home prices are not about to move higher, the decline certainly seems to have subsided.  On the news, Stocks ran higher, pressuring Mortgage Bonds lower.

The Treasury Department announced they will offer $110B in Treasuries next week in the form of $43B in 2-yrs, $39B in 5-yrs and $28B in 7-yr Notes on Tuesday, Wednesday and Thursday.  Yesterday, Bond prices rebounded

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An unexpected jump in Initial Jobless Claims gave Bonds a modest boost higher, but the improvement was halted by the strong 200-day Moving Average ceiling of resistance.  And with the next Treasury Auction announcement coming around 11:00am ET, we need to be on guard for exaggerated price movements.

Initial Jobless Claims were reported at 576,000, higher than expectations of 550,000, with the four-week moving average moving up to 570,000 from 566,000.  After a string of better than expected Initial Jobless Claims reports, today's reading was a bit sobering, showing the labor market remains weak.  We would need to see Claims readings in the low 400K’s to start believing that the Unemployment Rate has stabilized and could start to improve…so we have a

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Mortgage Bonds are trading sharply higher today as Stocks resume their correctional phase.  After a brief one-day rally, US equity markets are falling triggered by another sharp selloff in Asia.  The Chinese Stock market was clobbered for a 4.3% loss overnight.  The Shanghai Composite Index has lost an astounding 20% in just the past 2 weeks, pushing the index into Bear market territory.  During the past few months the Chinese Stock market, which had been outpacing other Stock markets around the world, was overdue for a correction.  Additionally, there is growing concern over the credibility and reliability on the data coming out of China and this is spooking investors.

There are no economic reports due for release today - but Traders may start to

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Mortgage Bonds are trading slightly lower, even after some typically bond friendly news by way of tame wholesale inflation data and weaker than expected housing numbers.  Prices are trying to remain above the 200-day Moving Average, so we are floating for now, but with a finger near the lock trigger should prices move another leg lower from here.

The Labor Department reported that the Producer Price Index (PPI), which measures inflation on a wholesale level, fell 0.9% in July after a 1.8% rise in June and greater than the -0.3% expected.  The Core PPI, which strips out volatile food and energy prices, was inline at -0.1%.  In the past year the Overall PPI has dropped by a record -6.8%...this going back to 1947, when data was first collected on PPI. 

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Mortgage Bonds are starting the week to the upside, as Stocks slide lower.  Stocks are reacting to renewed fears of a slower than anticipated world economic recovery.  If you look back at Friday's update, we felt concerned about the negative technical signals we were seeing for Stocks and wrote the following:

The technical picture for stocks looks to be bearish - A variation of an Evening Star Pattern along with a negative Stochastic Crossover, suggests a correction.

The Dow is down 250 points, or almost 3% since.  A correction is usually a 5-10% drop in a short time.

China’s Stock market dropped nearly 6% after their second largest insurer's profits fell 45% year-over-year and one of their huge manufacturers said it sees no sign of

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