Treasuries and mortgages held mostly flat Monday, as equities rose on expectations of a Greek bailout. This morning Treasuries and mortgage bonds are down slightly as the European Union said it expects Greece to announce new deficit measures.
Last week we learned the U.S. economy grew more than anticipated in the fourth quarter while home sales and consumer sentiment continue to disappoint. Today’s ISM Manufacturing is expected to show a small reduction to 58, down from the January 5-year high.
On Thursday, a number of factors conspired to push Treasury prices higher: increasing weekly jobless claims, dropping equities, and a well bid 7-year T-note auction.
Treasury prices are higher this morning due to a potential downgrade in Greece’s debt rating. This morning’s Treasury rally was somewhat blunted ahead of this afternoon’s looming government debt auction.
According to the Wall Street Journal, the number of U.S. workers filing unemployment rose again last week by 22,000 to a total of 496,000 initial claims for the week ending February 20th. This unexpected surge in claims is thought to have been contributed by the major snow storms which left many people without work.
Undoubtedly, one of the topics during Bernanke’s report will be last week’s increase in the discount rate by the Fed. Also, today’s January new home sales report is expected to show an improvement.
On Monday government bond prices were mostly lower following the Treasury’s uninspiring auction. The U.S. government today will auction $44 billion of 2-year T-notes as this week’s record debt sale continues.
Treasuries are mixed ahead of this week’s huge Fed auctions totaling $126 billion.
According to Bloomberg, the Mortgage Bankers Association reported a record number of foreclosures for the fourth quarter. Loans in foreclosure rose to 4.58% of all mortgages, and the number of mortgages that were more than 90 days overdue rose to 5.09%.
Bonds were on a downward slide all day yesterday. Today mortgage bonds are slightly lower from yesterday’s close. This morning’s economic releases included the January CPI report which was expected to show an increase on a year over year basis, the January CPI was expected to edge higher to +2.8% year over year.