San Diego Home Mortgage Blog

We do not want to to float today; suggest keeping everything locked through the day. Concern that the 10 yr may be setting up in a new trading range, 3.50% to 3.28%. Mtg prices this morning are weak; lets take a break from pressing the markets. That said; stay alert for our Rate Alerts and go with the flow.

Treasuries started a little better very early this morning

but by 8:00 the 10 yr note traded -5/32 at 3.37% +2 BP. At 9:00 the DJIA -58, the 10 yr note -13/32 at 3.40%, mtgs at 9:00 -9/32. At 9:30 the DJIA opened -63, the 10 yr -9/32 3.39% +4 BP, mtg prices -7/32.

No economic data to think about today, but the calendar this week has a lot to chew on. Much of the weekend talk centered on increasing trade tensions with China. The 10-year yield was near the lowest level in two months after President Obama imposed tariffs on Chinese tires, as the world’s fastest- growing major economy said it is investigating U.S. sales of chicken and auto products. It is an off and on think with China these days; trade concerns, currency concerns with China continuing to call for a new global reserve currency. Likely nothing will come of the current squabbles but with nothing more significant today markets need a topic.

The MSCI World Index of 23 developed markets slipped 0.9% at noon in London. Signs that the economies are recovering from the first global recession since World War II have prompted a six-month rally that pushed the MSCI World to its most expensive level in more than six years.The MSCI World of 23 developed nations trades at 27.3 times the earnings of its 1,659 companies after a 61% advance. Global equity markets have been teetering for a month now with no movement lower; given the strong underlying bullishness, to break stocks will take a shock and sentiment change; that may be coming tomorrow with August retail sales.

Consumers are not spending, markets are standing on the belief we can have our economic recovery without consumers; a pie in the sky view but markets can adapt any view as long as it fuels the bullish direction. We wonder out loud what happened to the markets' complete (and correct) belief that consumers account for 70% of GDP growth? Tomorrow retail sales are expected to be +0.4% when the auto sector is extracted; anything less will likely generate more selling in stocks, not sure however that it will help the bond and mortgage markets after the 20 yr failure to push to new lows last Friday.

At mid-day Pres Obama is coming to Wall Street to speak on the economic mess and likely something on the China situation. This being the 1st anniversary of the Lehman Bros failure, the trigger of the financial system meltdown. He will spend most of his efforts talking about financial system reforms.

This Week's Economic Calendar:

Tuesday;

8:30 Aug PPI (+0.8%; core +0.1%)

Aug retail sales (+1.9%; ex auto sales +0.4%

Sep NY Empire State manufacturing index (15.0 frm 12.08 in Aug)

10:00 July business inventories (-0.8%)

Wednesday;

8:30 Aug CPI (+0.3%; core +0.1%)

9:15 Aug Industrial Production (+0.7%)

Aug Capacity Utilization (69.1% frm 68.5% in July)

Thursday;

8:30 Aug hsg starts (580K, -0.5%)

Aug building permits (+5.4%)

Weekly jobless claims (+5K to 555K); (con't claims 6.114 mil frm 6.088 mil last week)

10:00 Sep Philadelphia Fed business index (+8.0 frm +4.2 in Aug)

Friday;

Rosh Hashanah