Market Analysis

Bond markets opened down but ended the day slightly positive despite improvement in the stock market. The Dow ended up 100 points at 10,525.   This week's mortgage rates are expected to take their cues from the performance of the stock market and investor demand for US Treasury auctions.  So far equities have benefitted from improved quarterly earnings reports.  Despite stock market strength though demand for US Treasuries is expected to be strong particularly given the uncertain picture that Fed Chair Bernanke painted last week.  Should investors require a higher yield for treasuries though there could be a round of selling as investors elect to take profits off the tables and wait to see if current bond prices are sustainable.  Below is a recap of this week’s economic calendar:

Monday, July 26, 2010

• June New Home Sales – expected up to a 310,000 annualized pace. Actual # was 330,000 for June with a revision to May up to 300,000 from 267,000

Tuesday, July 27, 2010

• July Consumer Confidence – expected down to 51.0 from 52.9 index in June.
• US Treasury auctions $38 billion of 2-year notes

Wednesday July 28, 2010

• June Durable Goods Orders – expected up 1.0% compared to down .6% in May. Excluding the transportation component expected up .6% vs up 1.6% in May.
• US Treasury auctions $37 billion of 5-year notes

Thursday, July 29, 2010

• Initial Jobless Claims week ended 7/23 – expected no change at 464,000
• Continuing Jobless Claims week ended 7/17 – expected increase to 4.55 million vs 4.487 million the prior week
• US Treasury auctions $29 billion of 7-year notes

Friday, July 30, 2010

• First estimate 2^nd Qtr Gross Domestic Product (GDP) – estimated up 2.5% vs 2.7% for 1^st Qtr
• 2^nd Qtr Employment Cost Index – expected up .5% vs up .6% in 1^st Qtr
• July Chicago Purchasing Manager’s Index (PMI) – expected down to 56.3 vs 59.1 in June
• University of Michigan Final July Consumer Sentiment Index – expected 67.5 reading vs 66.5 in June.