2009-05-26 11:39:02.46 GMT
By Anchalee Worrachate and Wes Goodman
May 26 (Bloomberg) — Treasuries rose amid speculation an industry report will show U.S. home prices fell for a 27th month and as the Federal Reserve prepared to buy government securities today and tomorrow.
Ten-year notes snapped a two-day loss after some investors said the economy isn’t recovering fast enough to justify keeping 10-year yields at the highest level in six months. Bonds also gained as stocks fell and North Korea fired two short-range missiles, a day after a nuclear test and similar missile launches drew international condemnation.
“The economic situation is still too dire for bond yields to go much higher,” said David Schnautz, an interest-rate strategist in Frankfurt at Commerzbank AG, Germany’s second- biggest bank. “And we have a geopolitical issue in North Korea which supports demand for safe-haven assets such as government debt.”
The yield on the 10-year note fell three basis points to 3.42 percent at 7:25 a.m. in New York, according to BGCantor Market Data. The 3.125 percent security due May 2019 rose 7/32, or $2.19 per $1,000 face amount, to 97 15/32. A basis point is
0.01 percentage point. The yield on the two-year note slipped two basis points to 0.87 percent.
Ten-year yields climbed to 3.45 percent on May 22, a level not seen since Nov. 19. The Treasury market was closed yesterday for U.S. and U.K. holidays.
The yield will fall to 3.28 percent by year-end, according to a Bloomberg survey of economists, with the most recent forecasts given the heaviest weightings.
To contact the reporter on this story:
Anchalee Worrachate in London at +44-20-7073-3403 or aworrachate@bloomberg.net
Wes Goodman in Singapore at +65-6212-1568 or wgoodman@bloomberg.net
To contact the editor responsible for this story:
Justin Carrigan at +44-20-7673-2502 or jcarrigan@bloomberg.net
ECONOMIC CALENDAR
Date Time Event Survey
05/26/2009 09:00 S&P/CaseShiller Home Price Ind MAR - -
05/26/2009 09:00 S&P/CS Composite-20 YoY MAR -18.40%
05/26/2009 09:00 S&P/Case-Shiller US HPI 1Q 140.7
05/26/2009 09:00 S&P/Case-Shiller US HPI YOY% 1Q -18.70%
05/26/2009 10:00 Consumer Confidence MAY 42.6
05/26/2009 10:00 Richmond Fed Manufact. Index MAY -6
05/26/2009 10:30 Dallas Fed Manf. Activity MAY -22.10%
05/26/2009 17:00 ABC Consumer Confidence 24-May - -
05/27/2009 07:00 MBA Mortgage Applications 22-May - -
05/27/2009 10:00 House Price Index MoM MAR 0.20%
05/27/2009 10:00 Existing Home Sales APR 4.66M
05/27/2009 10:00 Existing Home Sales MoM APR 2.00%
05/27/2009 10:00 House Price Purchase Index QoQ 1Q - -
05/28/2009 08:30 Durable Goods Orders APR 0.50%
05/28/2009 08:30 Durables Ex Transportation APR -0.30%
05/28/2009 08:30 Initial Jobless Claims 23-May 630K
05/28/2009 08:30 Continuing Claims 16-May 6740K
05/28/2009 10:00 New Home Sales APR 360K
05/28/2009 10:00 New Home Sales MoM APR 1.10%
05/28/2009 10:00 Mortgage Delinquencies 1Q - -
05/29/2009 08:30 GDP QoQ (Annualized) 1Q P -5.50%
05/29/2009 08:30 Personal Consumption 1Q 2.00%
05/29/2009 08:30 GDP Price Index 1Q 2.90%
05/29/2009 08:30 Core PCE QoQ 1Q 1.50%
05/29/2009 09:45 Chicago Purchasing Manager MAY 42
05/29/2009 10:00 U. of Michigan Confidence MAY F 68
05/29/2009 10:00 NAPM-Milwaukee MAY 42
05/29/2009 16:15 Bloomberg FCI Monthly MAY - -
Home Prices in 20 U.S. Cities Fell 18.7% in March From Year Ago
2009-05-26 13:00:29.917 GMT
By Courtney Schlisserman
May 26 (Bloomberg) — Home prices in 20 major metropolitan areas fell in March more than forecast as foreclosures surged, threatening to extend the housing slump.
The S&P/Case-Shiller home-price index decreased 18.7 percent from March 2008, matching the drop in year ended in February. The measure declined 19 percent in January, the most since data began in 2001.
Record foreclosures are depressing the value of other properties, contributing to a slump in household wealth that is hurting consumer spending and the economy. Still, falling prices and mortgage rates have made homes more affordable, helping to stem the slide in sales, which will eventually help prices stabilize.
“Foreclosures are producing these big monthly declines and at some point we’re going to run through the stock in foreclosures,” Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, said before the report. “But, there’s a big stock of foreclosures you need to work through.”
Economists forecast the index would drop 18.3 percent from a year earlier, according to the median of 26 projections in a Bloomberg News survey. Estimates ranged from declines of 17.9 percent to 18.9 percent.
Compared with a month earlier, home prices decreased 2.2 percent in March, also the same as in February, today’s report showed.
The price figures aren’t adjusted for seasonal effects, so economists prefer to focus on year-over-year changes.
To contact the reporter on this story:
Courtney Schlisserman in Washington at +1-202-624-1943 or cschlisserma@bloomberg.net
To contact the editor responsible for this story:
Chris Anstey at +1-202-624-1972 or canstey@bloomberg.net
Consumer Confidence in U.S. Jumps More Than Forecast (Update2)
2009-05-26 14:28:26.672 GMT
By Shobhana Chandra
May 26 (Bloomberg) — Confidence among U.S. consumers jumped this month to the highest level since September, reflecting growing perceptions that the job market will improve.
The Conference Board’s sentiment index surged to 54.9, higher than forecast and the biggest gain since April 2003, the New York-based research group said today. Another report showed home prices continued to plunge.
Recent jumps in the stock market, low mortgage rates and smaller job losses are brightening consumers’ outlooks and fueling forecasts that the economy will return to growth in the second half of the year. Still, the loss of wealth from the slump in real estate values and still-tight credit may temper a comeback in consumer purchases, muting the recovery.
“We’re certainly moving in the right direction,” said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. “We expect to have positive economic growth in the third quarter. The job declines will fade.”
Stocks extended earlier gains following the report. The Standard & Poor’s 500 index climbed 1.7 percent to 901.81 at
10:26 a.m. in New York. Treasury securities erased earlier gains to be little changed.
Consumer confidence was projected to rise to 42.6, according to the median estimate in a Bloomberg News survey of 70 economists. Forecasts ranged from 38.5 to 47. The index averaged 57.95 last year.
The Conference Board revised the April reading up to 40.8 from an originally reported 39.2.
To contact the reporter on this story:
Shobhana Chandra in Washington at +1-202-624-1888 or schandra1@bloomberg.net
To contact the editor responsible for this story:
Chris Anstey at +1-202-624-1972 or canstey@bloomberg.net
Richmond Fed Manufacturing Survey for May (Text)
2009-05-26 14:14:12.339 GMT
By Kristy Scheuble
May 26 (Bloomberg) — The following is the text of the Richmond Federal Reserve Bank’s manufacturing sector activity survey for May. May 26, 2009 Fifth District Survey of Manufacturing Activity
Manufacturing Activity Increases in May After 12 Months of Decline; Shipments and New Orders Rise
Overview
Manufacturing activity in the central Atlantic region rebounded sharply, according to the Richmond Fed’s May survey. The index of overall activity expanded for the first time in 12 months behind strong increases in shipments and new orders. Other indicators were mixed, however. Employment, backlogs, and vendor delivery times contracted, though at a slower pace, while capacity utilization turned positive. In addition, manufacturers reported somewhat slower growth in inventories.
Looking ahead, the outlook for business prospects over the next six months was in line with last month’s readings. Contacts at more firms anticipated steady growth in shipments, new orders, backlogs, and capacity utilization during the next six months.
Despite a marked improvement from last month, expected capital expenditures remained virtually stagnant in May.
Survey assessments also revealed that raw materials prices grew at a quicker pace in May, while finished goods prices grew more slowly. Over the next six months, respondents told us that they expected growth in both raw materials and finished goods prices to grow at slightly slower rates than they had anticipated last month.
To contact the reporter on this story:
Kristy Scheuble in Washington at +1-202-624-1974 or kmckeaney@bloomberg.net
To contact the editor responsible for this story:
Marco Babic at +65 6212-1886 or mbabic@bloomberg.net
U.S. May Dallas Fed Business Outlook Report (Text)
2009-05-26 14:40:48.519 GMT
May 26 (Bloomberg) — The following is the text of the Texas manufacturing activity from the Federal Reserve Bank of Dallas.
Texas factory activity remained weak and changed little from April to May, according to the business executives who responded to the Texas Manufacturing Outlook Survey. The manufacturing sector’s rate of decline stabilized over the past three months–a change from the accelerating contractions in the last quarter of 2008 and first two months of this year.
Most indicators of future activity continued to improve, suggesting manufacturers expect better conditions over the next six months. The future general business activity index–the survey’s broadest measure of Texas manufacturing trends–turned positive for the first time since September 2007. Indexes for future production, shipments, new orders and growth rate of orders rose markedly. More than a fourth of manufacturing executives foresee improvement in their firm’s outlook six months from now.
Although still negative, the overall business activity and company outlook indexes strengthened as the share of executives reporting improvements ticked up from April to May.
The renewed optimism has yet to show up in the other gauges of current activity. Indexes for production, new orders and growth rate of orders showed little change from April to May, but dips in the measures for capacity utilization and shipments suggest continued weakness.
Investment plans were still largely on hold. The index for capital expenditures remained negative both for the current period and for six months from now.
Manufacturers continued to work off excess inventories. The index for materials inventories was close to March’s record low, and 37 percent of companies noted declines in finished goods on hand.
Manufacturers’ labor demand continued to contract, albeit at a slower pace. Firms reporting job cuts exceeded those hiring workers by a 4-to-1 margin, down from 10-to-1 in April. Wage pressures remained minimal, with 82 percent of companies making no changes in compensation.
In May, declines in input and selling prices were widespread.
Firms receiving lower prices for their goods outnumbered those receiving higher prices 11-to-1. Nearly four in ten companies cited lower raw material prices. Firms expect deflationary pressures to begin subsiding. Only 18 percent anticipate decreases in finished goods prices six months from now, down from
36 percent in December.
The Dallas Fed conducts the Texas Manufacturing Outlook Survey monthly to obtain a timely assessment of the state’s factory activity. Data were collected May 12-20, and 100 Texas manufacturers responded to the survey. Firms are asked whether output, employment, orders, prices and other indicators increased, decreased or remained unchanged over the previous month.
Survey responses are used to calculate an index for each question.
Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report that activity has increased, an index will register 100. An index will register -100 when all firms report a decrease.
An index will be zero when the number of firms reporting an increase or decrease is equal.
Posted in THE FED |
