News for Prescott AZ - AmericanTowns.com

Monday, August 31, 2009

Bonds Battle Extreme Resistance

I LOVE THESE ARTICLES FROM THE mmg.

For the week of Aug 31, 2009 --- Vol. 7, Issue 35

 

 

 

Last Week in Review

 

 

"I DON'T KNOW WHY I GO TO EXTREMES." Billy Joel. Last week, Bonds went to the extremes of their trading range, battling tough layers of technical resistance as they attempted to improve. Let's take a closer look, and understand the news of the week.

There was good news on the inflation front as the Federal Reserve's preferred inflation gauge, the Core Personal Consumption Expenditure Index (PCE), indicated that inflation remained tame last month. Generally tame inflation is a good sign for Bonds - but there is still concern, as inflation is certainly coming...it's just a matter of when.

-----------------------
Chart: Core Personal Consumption Expenditure Index

As part of that same report, Personal Income and Spending were both reported inline with expectations. Interestingly enough, consumer spending has now risen three months in a row. However, this needs to be taken with a grain of salt, as this boost comes on the heels of the Government's "Cash for Clunkers" program, which likely boosted spending statistics. Until the labor market stabilizes, we won't likely see a meaningful pickup in consumer spending. Speaking of the consumer, the Consumer Sentiment Index was also reported in line with expectations.

There was also more good news on the housing front last week. The Case-Shiller Home Price Index showed home prices rose for the second straight month while New Home Sales surged 9.6% in July from June's reading, signaling that the housing market is stabilizing. Adding to the positive tone of the report was a drop in inventories, which now stands at a 7.5-month supply from last month's 8.8 month reading.

Keep in mind that some of the current buyers are adding a bit of what may be an artificial boost to the housing numbers, as they normally would have purchased in 2010 but have moved up their buying decisions to take advantage of tax credits and historically low rates. Let me know if you would like more information on these time-sensitive tax credits.

It's also important to note that the revised second Quarter Gross Domestic Product Report showed that the economy has now contracted for four consecutive quarters for the first time since the Great Depression. This is another area to watch in the coming months as we gauge the pace of recovery.

Remember, positive economic news typically causes money to flow from Bonds to Stocks, causing Bonds and home loan rates to worsen. However, even with the pressure of more supply from last week's Treasury auctions, Bonds and home loan rates were able to hold on to some improvements and end the week very slightly better than where they began.

SITTING IN A PLANE ON THE TARMAC FOR HOURS IS AN EXTREME SITUATION NONE OF US WANTS TO EXPERIENCE! CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR SOME GREAT INFORMATION ON PASSENGER RIGHTS.

 

Forecast for the Week

 

 

Friday will be a big day this week, and not just because people will be getting ready to celebrate the Labor Day Holiday. The Labor Department's Jobs Report for August will be released at 8:30am ET. July's report showed glimmers of hope for an improving job market: 247,000 jobs lost in July versus economists' expectations of 328,000 jobs lost, the smallest loss since August 2008. Even better, the Unemployment Rate dropped to 9.4%, from the prior month's reading of 9.5%, which broke a streak of 9 straight monthly increases. It will be important to see if these trends continue.

Speaking of the job market, it will also be important to keep an eye on Thursday's weekly Initial Jobless Claims Report. The recent trend of higher than expected Claims is disappointing after what appeared to be a steady decline in Claims earlier this summer. We'll want to take notice on Wednesday of the Meeting Minutes from the latest Federal Open Market Committee meeting. Any comments regarding future inflation could move the markets.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds and home loan rates faced an extremely tough triple layer of resistance at the end of last week. With no Treasury auctions ahead this week, I will be watching closely to see if Bonds and rates can bust through this resistance and improve any further.

Chart: Fannie Mae 4.5% Mortgage Bond (Friday Aug 28, 2009)

Japanese Candlestick Chart

 

The Mortgage Market View...

 

 

Stranded on the Tarmac...What Should You Do If It Happens to You?

Earlier this month, a Continental Airlines flight stranded passengers on the tarmac for 6 hours. A couple weeks after that, passengers on a Sun Country flight also sat on the tarmac for a grueling 6 hours.

For proof that these aren't isolated incidents, you only have to look back in history to similar situations. In 1999, Northwest Airlines stranded a plane on the tarmac for 8 hours. American Airlines also stranded passengers for 8 hours in 2006. In 2007, JetBlue held passengers on the tarmac for 11 hours. In many of these cases, passengers were stuck on planes with no food or water-not to mention terrible odors coming from the cramped airplane bathrooms.

But what can you do if you're on a flight that gets stranded on the tarmac? The information below describes what you can do to be prepared and make sure your voice is heard.

Know Your Rights

As a result of long delays years ago, the Air Transport Association-which includes Delta, United, Continental, Southwest, and other airlines as members-released a Customer Service Plan stating that airlines will:

  • Notify passengers of known flight delays and cancellations
  • Meet customers' essential needs during long on-aircraft delays
  • Allow reservations to be held or tickets to be refunded within 24 hours of purchase
  • Be more responsive to customer complaints

The details of the self-governed Customer Service Plan should be posted on each airline's website. So, before you head to the airport, take a minute to review the airline's specific details regarding this plan.

You can check out the Air Transport Association's website for links to specific airlines. If the airline you're flying on isn't listed on that website, you may be able to find a customer's bill of rights on the corporate website. For instance, JetBlue offers a detailed bill of rights on its website for customers.

What Can You Do?

The national debate is gaining momentum and now's the time to make sure your voice is heard. There are a number of ways that you can join the discussion.

You may want to join the effort to put more stringent rules onto the law books. For example, the Coalition for Airline Passenger's Bill of Rights has proposed a set of rights to be written into law, including a requirement that airlines "establish procedures for returning passengers to terminal gate when delays occur so that no plane sits on the tarmac for longer than three hours without connecting to a gate." You can view the proposed Bill of Rights on FlyersRights.org.

In addition, you can sign a Petition for the Airline Passenger Bill of Rights. You can also contact your Senators and Representative in Congress to make sure they take this issue seriously and work to protect airline passengers' rights. If you don't know how to contact your Senators and Representative, you can quickly find their names, telephone numbers, and websites by typing your zip code into the Congressional Directory on CongressMerger.com.

Finally, if you do experience a horror story on the tarmac, you can submit a complaint form to make sure the incident is recorded.

Be Prepared Before You Fly

Before you get on your next flight, visit FlyersRights.org to download and print two important documents that you can carry on the plane.

The first document is the Emergency Kit Document, which lists items you should have handy on your next flight. The second document is the Stranded Passenger Survival Guide, which features information on what you can do if your plane is stranded on the tarmac for an unreasonable amount of time.

It all comes down to taking some time before you fly to know your rights, be prepared, and take part in the conversation. Have a safe, comfortable flight.

 

The Week's Economic Indicator Calendar

 

 

Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise.

Economic Calendar for the Week of August 31 - September 04

Date

ET

Economic Report

For

Estimate

Actual

Prior

Impact

Mon. August 31

09:45

Chicago PMI

Aug

47.2

 

43.4

HIGH

Tue. September 01

10:00

ISM Index

Aug

50.2

 

48.9

HIGH

Wed. September 02

08:15

ADP National Employment Report

Aug

-246K

 

-371K

HIGH

Wed. September 02

08:30

Productivity

Q2

6.1%

 

6.4%

Moderate

Wed. September 02

10:30

Crude Inventories

8/28

NA

 

+128K

Moderate

Wed. September 02

02:00

FOMC Minutes

8/12

 

 

 

HIGH

Thu. September 03

10:00

ISM Services Index

Aug

48.0

 

46.4

Moderate

Thu. September 03

08:30

Jobless Claims (Initial)

8/29

570K

 

570K

Moderate

Fri. September 04

08:30

Average Work Week

Aug

33.1

 

33.1

HIGH

Fri. September 04

08:30

Hourly Earnings

Aug

0.1%

 

0.2%

HIGH

Fri. September 04

08:30

Non-farm Payrolls

Aug

-225K

 

-247K

HIGH

Fri. September 04

08:30

Unemployment Rate

Aug

9.5%

 

9.4%

HIGH

 

 

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