Banks held up well after dreary stories, especially on rising Treasury yields. The closing end of day rally doubled the gain for the day.
| Value 130.95 | Change 5.30 | % Change 4.2% |
MLPs were up modestly while oil slipped pennies & REITs found strength in the last few days:
Dow Jones REIT Index --- 2 weeks
Treasury Bonds have been weak in the last couple of weeks. The yield on the 10 year Treasury had dropped to around 2½%, but is now up to 2.90% (just today is rose 15 basis points) as the Treasury prepares to sell $59B in securities next week. By way of comparison, the Treasury bond yield averaged 4¼% over the last 5 years. Goldman Sachs estimates the Treasury will need to borrow more than $3T (that's T as in trillion) by year end (Sep 30) to finance the enormous gov spending packages Congress has approved. Even more disturbing is that the Federal Reserve has been buying Treasury bonds to bring yields down while bond yields have been rising. Higher yields add to the the gov deficit (which is already out of sight). In addition, higher interest rates on the Treasury will bleed thru to mortgage, raising their interest rates.
•Treasuries Tumble as Traders Shift Focus to Record Debt Supply From Jobs
Speaking of bonuses, Fannie Mae & Freddie Mac are planning on giving out $210M in bonuses. Huh?? These are incentive payments to keep "good" workers who gave taxpayers the mess that made Fannie Mae & Freddie Mac penny stocks lucky to be alive. I wonder who in Congress approved these payments!
Dow wavered all day, not straying too far from break even. The bulls will point to the lack of selling as an excellent response to very ugly news on the economy & higher interest rates on Treasury bond. The strong finish taking the average above 8K adds to their argument. Next week, 2 Dow stocks, Alcoa (AA) & not far behind General Electric (GE), GE's basically a financial company these days, will lead off earnings season. Markets will listen to what they say.
No comments:
Post a Comment