Market Analysis

US Treasury notes and mortgage-backed securities (MBS) issued by Fannie Mae and Freddie Mac are posting gains today which analysts are attributing to fears about a global outbreak of swine flu.  Rates are flat but closing costs for the same rate are slightly lower.  This week's economic activity includes:

Today - Treasury auctions $40 billion in 2 year notes

Tuesday

• April Consumer Confidence Index - index value of 30.0 vs last month 26.0 expected.
• Treasury auctions $35 billion of 5 year notes
• Federal Reserve begiins two day meeting

Wednesday

• 1st estimate of Q1 2009 GDP  - expected -5.0% vs last quarter -6.3%
• Treasury auctions $26 billion of 7 year notes
• Fed releases post meeting statement - statement is expected to remain negative on short term economic improvement. Fed is not expected to take additional action.  Should the Fed increase their Treasury and/or conforming mortgage backed security re-purchase plan, this would benefit rates.  However, such action is not likely.

Thursday

• Initial jobless claims for week ended 4/25 - expected up 2,000
• Q1 2009 Employment Cost Index - expected up .4% vs last qtr up .5%
• March Personal Income and Spending Report which includes the PCE index, a favorite inflation measure of the Federal Reserve - Income expected down .2% vs last month down .2%, Spending expected down .1% vs last month up .2% PCE index expected at 0% vs last month up .2%.

Friday

• March Factory Orders - expected down .8% vs last month up 1.8%
• April Institute of Supply Management manufacturing index - expected to be 38.0 vs last month 36.3 (anything under 50 represents continued contraction).