The Pain Of No Gain Stays Mainly In Spain

Spain's Prime Minister Mariano Rajoy is slated to roll out more austerity measures designed to help the country meet its budget deficit goals as part of the rules recently agreed to in the european union. Unfortunately, Spains GDP is already contracting, and the country is grappling with a 23% unemployment rate so it is very difficult for the country to grow and pay down debt with even more austerity. So what are the citizens doing while looking at the economic hole and more tightening measures? And the answer is, you guessed it, evidently you hit the streets and riot. They don't want to adopt tough measures to help the country regain solvency. The Spain story sounds a lot like Greece not to long ago.

Market Update

Today’s 5-year auction was a clunker - so looking ahead, this does not bode well for tomorrow's longer-term 7-year note auction. The Bond remains just above the 100-Day Moving Average but volatility reigns supreme. The Bond did gain 141bp in 6 trading days. MBS fell on the above technical bearish signals after the recent rally. The 3.5% coupon fell to 102.62 down 25bp. The Dow fell 71.52 points to 13,126.21. The Treasury will sell $29B 7-yr notes tomorrow. Initial Jobless Claims and GDP will be reported and Claims should be around 350K and GDP at 3.0%.

Made your payments on time but you are left out of special programs?

Fannie and Freddie may consider principal write downs.

Homestead Mortgage, L.C.
Bonds are struggling to get off the down escalator trend and break above the 100 day moving average (see chart). New Home Sales fall 1.6% in February to 313K units annually, below the 323K expected. Within the New Home Sales data it was reported that median prices rose 8.8% to $233,7000, the largest 1-month rise in 14 months. The national average price for a regular gallon of gasoline is at $3.88 up from $3.57 a month ago. Lots of market moving indicators next week.

 

Market Update March 22, 2012

Initial Jobless Claims fall 5K to 348K in the latest week and are the fewest since February of 2008. Bonds losing some of their luster after the data. The yield on the 10-Year T Note falls to 2.26% after hitting 2.39% earlier in the week. Freddie Mac reports that home loan rates rose to 4.08% in the latest week - to obtain that rate you would have to add on a 0.8 point. Fed's Bullard sees "inflationary risks" this year, was he reading our post yesterday? It's good to see that some Fed Govenors have woken up as I have been talking about inflationary signs for months.