6/3/09

Good morning. Mortgage Bonds have been improving this morning (finally!) after the volatility of recent days. There was news from the job front, as ADP reported that the private sector cut 532,000 jobs in May, the fewest jobs lost since November. Maybe the news that GM plans to sell Hummer to China's Tengzhong, saving 3,000 jobs is helping as well. Yesterday we found out that “Pending U.S. Home Resales” were up 6.7% in April, the most since 2001, and the fourth increase in five months and much higher than expected. Of course lower prices are attracting buyers – that is how most markets tend to work. But still, it is a promising statistic. All of this is ahead of Friday's government Non-farm payrolls report where it is expected that there were 550,000 jobs lost for May.
Also this morning, Fed Chairman Ben Bernanke is on Capitol Hill discussing the current economic climate in front of the House Budget Committee, and this could impact the markets. Stocks are battling a key resistance level and if they reverse lower, Bonds could benefit. I recommend floating, and will be watching closely to see what direction the action takes. Let me know if you have any questions.