S&P 500 FINANCIALS INDEX
| Value | 188.69 | |
| Change | -0.39 (-0.2%) |
The MLP index was up almost 1 to 323 while the REIT index was up pocket change to just over 200. Junk bond funds were generally lower but still offering relatively skimpy yields after their 10% rise this year. The VIX was little changed near 26. But Treasuries were red hot! The yield on the 10 year Treasury bond plunged (there is not other way to describe today's move) 11 basis points to 2.57½%, a new 16 month low. The € was up half a penny to just over $1.28.
Treasury securities
| U.S. 3-month | 0.15% | |
| U.S. 2-year | 0.49% | |
| U.S. 10-year | 2.57% |
Alerian MLP Index --- YTD
Dow Jones REIT Index --- YTD
VIX --- YTD
10-Year Treasury Yld Index --- YTD
Oil is stuck in its sideways trading zone while gold is hot again. Gold prices rose to a 6 week high on signs the global economy is faltering, boosting demand for gold as a protector of wealth. A YTD chart shows gold has had a very good year & may be headed back up for new record levels.
| CLU10.NYM | ..Crude Oil Sep 10 | ..75.18 | .. 0.21 ......(0.3%) |
| GCQ10.CMX | ..Gold Aug 10 | ..1,224.50 | .. 9.60 ......(0.8%) |
GLD (ETF) --- YTD
Photo: Bloomberg
Mighty Google (GOOG) is leading a revival in commercial paper (CP). Nonfinancial companies are grabbing the biggest share of the $1.1T US market from banks in 8 years with an environment of lower borrowing costs. Industrial companies have $151B of debt typically due in 270 days or less, up 47% in 2010. GOOG started a commercial paper program last month for as much as $3B. This surge in CP issuance may signal that executives are optimistic the US will avoid slipping back into recession. The highest-rated non-bank issuers pay an annualized rate of only 27 basis points (0.27%) for 90-day paper, compared with an average of 194 basis points (1.94%) over the past 10 years. More than a dozen other companies have said they boosted CP use to refinance more expensive debt, fund acquisitions & meet day-to-day expenses. GOOG was off a fraction in the 485s, back where it was 3 years ago.
Google Leads Revival in Commercial Paper as Rates Fall
Google --- YTD
The Federal Reserve (FED) said bank lending standards eased somewhat in Q2 while demand for business & consumer loans was largely unchanged. In its quarterly Senior Loan Officer Survey, the FED found that tight lending conditions were starting to ease at bigger financial institutions, a hopeful sign for economic recovery. However smaller banks continued to struggle. The FED survey found looser lending conditions for most types of commercial & industrial loans.
Banks ease lending standards for first time in 4 years
There is little to talk about today in the markets. Stocks are sloshing around looking for direction with a lot of traders taking very long weekends. The MLP index is trying to gain traction for another assault on its record high. But the big story is the dramatic decline in Treasury yields. The yield on the 2 year Treasury is back below 50 basis points, an important resistance level. The 10-year Treasury bond could be heading back down to the 2+% level reached almost 2 years ago. However, life is much different this time. Banks are in halfway decent shape, even if they aren't doing much lending. A year ago the FED was making plans to raise rates along with a strong recovery. Now those plans for higher rates refer to the distant future.
Dow Jones Industrials --- YTD
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