S&P 500 FINANCIALS INDEX
| Value 202.32 | Change -4.30 | % Change -2.1% |
MLPs were lower after the big MLP offering yesterday. The Alerian MLP Index was off 0.47 taking the index below 250. The Dow Jones REIT Index was down a big 7 , but that's off their yearly high. Junk bond funds firmed, bringing their yields down to the 11% area (not far above levels in ordinary times).
The yield on the 10-year Treasury bond fell 4 basis points to 3.42% (the bond price rose) remaining in its sideways trading range under 3½%. A record $40B in 5-year notes sold today drew a yield of 2.47%, just above the forecasted rate. The bid-to-cover ratio, was 2.40X, compared with an average of 2.23X at the last 10 auctions. The auction was rated as only mixed. Tomorrow, $29B in 7-year debt will be sold.
Alerian MLP Index --- YTD
Dow Jones REIT Index --- YTD
Oil is back downto the low end of its multi month trading range (around 67-8) while gold was flat. The dollar continues weak, the € is $1.48 & it takes 91+ ¥ to buy a dollar.
| CLX09.NYM | ..Crude Oil Nov 09 | ..68.97 | .. 2.79 ......(3.9%) |
| GCU09.CMX | ..Gold Sep 09 | ..1,013.00 | .. 1.20 ......(0.1%) |
The Federal Reserve will stretch out its goal of buying $1.45T (that's T as in trillion) in mortgage-backed securities & debt issued by Fannie Mae, Freddie Mac & Ginnie Mae for another 18 months. Originally, the intention was to complete the program by the end of 2009. This is the 2nd time the FED has opted to slow some of its extraordinary support to revive the economy. The FED said: "Economic activity has picked up following its severe downturn." In August, the FED declared that economic activity was "leveling out." The FED also "expects that inflation will remain subdued for some time."
The rates for home loans should remain low "in the 5% range" at least for the next 18 months. To foster recovery, the key bank lending rate was left at a record low near zero, and again they pledged to keep rates there "for an extended period." By one estimate, the FED is buying about 85% of the mortgages issued (basically bankrolling mortgage lending).
Fed Says Mortgage-Backed Purchases Will Slow, Sees Economy Strengthening
As expected there were no dramatic changes or announcements made by the FED. Low interest rates will continue for some time to come. But they are setting the stage for ending their subsidizing mortgage markets. Selling in the last hour (highlighted by banks) may set a negative tone for tomorrow.
Dow Jones Industrials --- YTD
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