Today is a slow economic news day with the Chicago Fed Index out at 8:30 a.m. and the Redbook out at 8:55 a.m. Most investors are waiting for the FOMC minutes to be released tomorrow.
This week FOMC minutes are due out on Wednesday, Jobless claims in Thursday, and we will close the week with New Homes Sales on Friday. The chance for volatility is high this week with many key speakers and economic data due out.
Treasuries declined in the early morning hours before a report economists predict will show U.S. employers increased hiring in June and jobless rates fell. These key economic indicators suggest the economy is recovering.
Overnight, 10-year notes rose for a third day as investors sought safer assets after two of Portugal’s ministers resigned from the government, reigniting concern the European debt crisis is worsening.
The ISM Manufacturing Index rose to 50.5 last month, up from 49 in May. A report reading 50 is the dividing line between growth and contraction. U.S. employers added 165,000 workers last month after hiring 175,000 in May.
Treasuries rose yesterday when the President of the Federal Reserve Bank claimed the central bank isn’t close to decreasing its balance sheet as officials have speculated.
Home prices rose faster from March to April than they ever have in the history of the index. The composite index of 20 metropolitan areas gained 2.6%, which included Detroit.
The bond market rallied this morning. Investors sought safer assets amid speculation a credit squeeze in China will slow growth in the world’s second-largest economy.
All should be quiet on the home front with no economic data scheduled to be released. It will be an opportunity to reevaluate what happened during the past week. Most economists believe the market has overreacted to the Fed’s announcement.
Bonds are Treasuries tumbled and the MBS market was sent into a tailspin causing multiple re-prices late in the evening. The 30-year MBS best execution rate has risen to 4.25%, a rate not seen since 2011.