S&P 500 FINANCIALS INDEX
| Value | 195.74 | |
| Change | -0.41 (-0.2%) |
The MLP index was up a fraction to 350½ & the REIT index gained ½ to 220. Junk bond funds were mixed to higher. Treasuries rose on expectations the FED buy notes & bonds. The yield on the 10 year Treasury bonds fell 3 basis points to 2.62%.
Treasury yields:
| U.S. 3-month | 0.12% | |
| U.S. 2-year | 0.36% | |
| U.S. 10-year | 2.62% |
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index --- 2 weeks
10-Year Treasury Yield Index --- 2 weeks
Oil dipped but remains above the 80 support level. Gold fell waiting for the next push up to new heights.
| CLZ10.NYM | ...Crude Oil Dec 10 | ...81.77 | ... 0.41 | (0.5%) |
| GCX10.CMX | ...Gold Nov 10 | ....1,336.80 | ... 5.30 | (0.4%) |
The Commerce Dept reported Q3 GDP rose at a 2.0% annual rate, faster than the 1.7% pace in Q2 but below the average forecast of a 2.1% rate. Growth in Q3 primarily came from consumer spending & an inventory buildup. The trade sector was less of a drag than in Q2. The gov sector added to growth but the housing market was a renewed drag on activity (no surprises there). The economy may be stuck in this 2% growth range that is called a “stall speed” because it leaves the economy vulnerable to downward shocks. In addition, a 2% growth rate is not a strong enough pace to bring down the unemployment rate that is stuck around the current 9.6% rate. But the data also suggest continued downward pressure on inflation. Anemic growth & the specter of falling prices makes it even more likely that the Federal Reserve (FED) will launch another round of bond purchases after its 2-day meeting next week. The consensus is that the FED will announce a plan to buy $500B in Treasurys over a 6-month period, though there have been some doubts about the size in recent days. Over the past 4 qtrs, the economy has risen 3.1%, the biggest year-over-year increase since the Q3 of 2005. However, this improvement has barely reduced the high unemployment rate.
U.S. Economy Grew 2% in Third Quarter on Consumer Spending
Consumer sentiment worsened more than expected in Oct, hitting its lowest level since Nov, with concern about the economy high leading into next week's election. The Thomson Reuters/University of Michigan's final Oct reading on the overall index on consumer sentiment came in at 67.7, down from 68.2 in Sep & below the 68.0 median forecast. Earlier this month, the survey showed consumers' assessments of gov economic policies fell to the lowest level since Obama took office. The survey's barometer of current economic conditions declined to 76.6 from 79.6 in the prior month & the gauge of consumer expectations edged up to 61.9, above last month's 60.9 reading. This data is another reminder than consumers remain glum while high uenmployment drones on (shown in the charts below).
U.S. Michigan Consumer Sentiment Index Decreased in October
Consumer sentiment - 1 year
Expectations for 6 months forward - 1 year
Current conditions - 1 year
Sales of junk bonds in the US set a record for Oct as returns topped investment-grade debt & more borrowers were raised than cut. Speculative-grade companies sold $33B of debt. The notes have gained 2.32% on average in Oct, compared with a loss of 0.16% for high-grade securities. Not since Mar have high-yield, high-risk securities outperformed by such a wide margin. Investors have driven relative yields down to the lowest in 5 months on confidence the FED will flood the economy with money, allowing the neediest borrowers to access capital & refinance debt. Money managers who are bullish on junk bonds have a positive outlook toward them in 2011, saying investors will be searching for yield & willing to go down the rating scale.
Junk Bond Sales Set October Record; Mortgage Bonds Rally: Credit Markets
The markets were not expecting much excitement from the GDP & that's exactly what they got. Treasuries have been inching higher bringing their yields down a notch or 2. No dramatic moves are anticipated until the FED meeting next week. Higher yielders continue at their elevated levels with the MLP index essentially at its record level. However, even this hot index has hardly budged in the last 2 weeks (as for the Dow). PM trading will probably be lackluster as it should Mon ahead of the midterm elections.
Dow Jones Industrials --- 2 weeks
Diversification Doesn't Work!
Find out what's inside Trend TV!
Get your favorite symbols' Trend Analysis TODAY!
No comments:
Post a Comment