Friday, February 19, 2010

Markets meander trying to assess rise in bank interest rates

The Federal Reserve's move was not completely understood by the markets, causing them to stumble following a solid 2 week rally. Dow hugged the break-even line, ending with a gain of 9, advancers ahead of decliners 3-2 & NAZ was up 2. Buyers for banks stocks on balance liked or at least accepted the FED's move. The Financial Index had a decent gain.


% Change

Today was a time for sloshing around in the high yield markets. The Alerian MLP Index continues from the AM, down pennies in the 291s & little changed for 3 days. The Dow Jones REIT Index was up pennies & is approaching 181 from which it has not strayed for months. Junk bond funds have a similar performance to MLPs, this week up followed by a flat period. Treasury bonds had a minor rally in the PM, the yield on the 10-year Treasury bond fell 2 basis points to 3.78%.

Alerian MLP Index --- 3 months

Dow Jones REIT Index --- 3 months

Oil shot up 11% in 2 weeks (shown in the graph) taking oil near its multi-month highs. Oil wants to make 80 (about 26 on the graph) its floor again. Gold has had a nice bounce off its lows below 1100 & may be building a base for future gains.

CLH10.NYM..Crude Oil Mar 10..79.81 ..Up 0.75

GCG10.CMX..Gold Feb 10..1,121.30 ..Up 3.30

Gold Super Cycle Click Here

OIL (ETF) --- 3 months

Mortgage problems are growing as a record number of Americans were in danger of losing their homes in Q4. Loans in foreclosure rose to 4.58% of all mortgages, while those more than 90 days overdue climbed to 5.09%. More hard-core unemployed are having problems making mortgage payments. Payments overdue by 30 days or more for all types of mortgages fell to 9.47% in Q4 from 9.64% in Q3, the first drop since Q1 of 2007. The delinquency rate for prime loans fell to 6.73% from 6.84%, & the share of sub-prime late payments fell to 25% from 26%. At least the big problems may not be getting any bigger. U.S. Housing & Urban Development (HUD) is taking $1.5B from TARP funds to start a foreclosure-prevention initiative which targets the housing markets that need it most. The money will go to housing-finance agencies in Nevada, California, Arizona, Florida & Michigan.

U.S. Mortgage Foreclosures Rose in Fourth Quarter

Volume continues light (1.1B on the NYSE floor) as markets need to find reasons for advancing. Dow has made a nice move off its recent lows but is still plodding along, unable to make progress in 3 months, Today's moves to help housing, especially in the severely depressed states, may do some good. But that remains to be seen. There was recognition by the president, during his speech in Nevada, that lingering high unemployment rates need to be solved because they are the core of the economy's malaise. There is a button below for those who want to blog at the Traders Blog.

Dow Jones Industrials --- 3 months

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