Wednesday, February 27, 2013

Markets rise on new orders data

Dow rose 89, advancers over decliners 3-1 & NAZ was up 28.  The Financial Index climbed 1 to 235.  The MLP index was up 2 to the 427s & the REIT index went up 2 to the 279s.  Junk bond funds were mixed & Treasuries inched higher.  Oil slipped back & gold fell to the 1600 support level.

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLJ13.NYM...Crude Oil Apr 13...92.51 ...Down 0.12  (0.1%)

GCG13.CMX...Gold Feb 13...1,609.00 Feb 26...Down 6.20  (0.4%)

Italy’s 10-Year Bonds Advance After Nation Auctions Securities

Photo:  Bloomberg

Italy’s 10-year gov bonds rose, pushing yields down from a 3-month high, after demand increased at the nation’s first bond auction since its inconclusive election results.  The bonds pared their first monthly decline since Jul as the Treasury sold €6.5B ($8.5B) of 5 10-year securities.  Spanish bonds also gained as a report showed economic confidence in the euro area increased more than analysts forecast in Feb.  The rate jumped as much as 44 basis points yesterday, the biggest increase since Dec, 2011, & has climbed 53 basis points this month.  Italy sold €4B of new 10-year bonds at an average yield of 4.83%, up from 4.17% at the Jan 30 auction.  The sale came as EU leaders put pressure on Italy’s political parties to form a unity gov committed to budget rigor.  EU Economic & Monetary Commissioner Olli Rehn said it is “important to get a functioning government in Italy.”  Nobody knows what's going on here!

Italy’s 10-Year Government Bonds Advance After Auction

Orders for U.S. Non-Transport Durable Goods Jump Most in a Year

Photo:   Bloomberg

Orders for US durable goods excluding transportation equipment climbed in Jan by the most in a year, indicating business investment is holding up.  Bookings for equipment meant to last at least 3 years minus demand for things such as aircraft climbed 1.9%, exceeding the forecast & the most since Dec 2011.  But Commerce Dept data showed that total orders dropped more than projected, reflecting the biggest slump in defense bookings in a decade.  Healing overseas markets, sustained demand for automobiles & leaner inventories are combining to stabilize manufacturing.  Last month’s gain may reflect relief that the US skirted most of the tax increases & spending cuts associated with the fiscal cliff, even as further progress on a budget compromise hit a brick wall.

Orders for U.S. Non-Transportation Goods Jump Most in a Year

The number of Americans who signed contracts to buy homes rose in Jan from Dec to the highest level in more than 2½ years, suggesting sales of previously occupied homes will continue rising in the coming months.  The National Association of Realtors said that its index for pending home sales rose 4.5% last month to 105.9.  That's the highest since Apr 2010, when a homebuyer's tax credit was about to expire.  There is generally a 1-2 month lag between a signed contract & a completed sale.  Pending home sales rose in all regions, but just barely ticked up in the West, where a limited supply of available homes is holding back sales.  And new-home sales jumped 16% last month from Dec to the highest level since Jul 2008, the Commerce Dept said yesterday.  Home prices, meanwhile, rose by the most in more than 6 years in the 12 months ending in Dec.  Steady price increases are also contributing to the housing recovery.  They encourage more people to buy before prices rise further.  Higher prices also build homeowners' wealth, which can spur more spending & economic growth.  Builders, meanwhile, started work on the most new homes in 4½ years in Dec.  Last year was the best year for residential construction since 2008, just after the recession started.  Housing is in a recovery mode.

U.S. Pending Home Sales Rise to Highest Since 2010 AP

Economic data was favorable, bringing out buyers.  Confused elections results from Italy are a cloud that could be hanging over the markets for some time.  The federal budget cuts & debt mess are much bigger problems, but they "can't get no respect."  The pres is the one who came up with the sequester idea idea in 2011 to solve the then problem of raising the debt ceiling.  Now the idea is once again to kick the can down the road.  Solve today's problems today, tomorrow will take care of itself.  Even with today's rise, Dow continues to hug 14K, which it has been doing for a month.   Sorry, no graphs today.

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