June 11, 2009
June 11, 2009 by admin
The stock market jumped higher following key economic reports released Thursday morning. The market saw positive signs from the retail sales report and continuing job claims report. The market is more focused today on economic reports and corporate earnings, but is keeping a close eye on the treasury markets, which have seen the yields on bonds rise sharply over the last thirty days.
Retail sales for the month of May were up .5%, in line with most analyst’s expectations, but still over 10% lower than in May of 2008. The report of continuing job losses indicated a slight pull back in job loss claims for the week, another sign that the economy may begin to finally being hitting its bottom. The total number of unemployment claims remains in excess of six million claims. The job market remains the key driver of the economy and reports that the trend of job losses appears to be easing is welcome news to the market.
The market is closely following the results of the Fed bond auctions this week. The yield on bonds has been driven up sharply over the last thirty days as concerns are growing over the load of debt the U.S. is attempting to finance in the market. The market is also feeling pressure from surging oil prices, which have eclipsed $70 per barrel and jumped over 100% since March of 2009. The rapid move up within the equity markets are also impacting the bond market as investors view more attractive returns with stocks, helping lower demand on bonds. The yield on the closely followed ten year treasury bond has touched 4% and is hovering in the 3.9% range. The residual effect of the rise in yield with the ten year bonds is an indication of the changing in prices within the bonds markets, which directly impact long term lending rates (mortgage rates) and have the direct impact of raising interest rates.
Rising interest rates will remain a key concern in the attempt to stabilize the housing market. Today, RealtyTrac reported that home foreclosures for the month of May were six percent lower than in the month of May, but were almost twenty percent higher than their level in May of 2008. Home foreclosures remain a large issue in stabilizing the housing markets, as bank owned homes and foreclosed properties have significantly deteriorated housing prices across the nation. Stabilizing the housing market becomes more difficult as mortgage rates move higher, despite attractive incentives from the government and abundant housing inventory.