Interest Rate Roundup

Thursday, November 01, 2007

Another deluge of data

The Fed meeting is behind us, but the week's data deluge is far from over. We just got another batch of information to chew over ...

* Personal income gained 0.4% in September, in line with expectations, while personal spending rose 0.3%, a tad slower than the 0.4% gain expected. The price index embedded in the spending report rose 0.2% on the month, the biggest rise since May, while the "core" inflation reading also came in at 0.2%. That pushed the year-over-year rate of headline inflation to 2.4% from 1.8% in August, while the core inflation rate remained stable at 1.8%.

* Initial jobless claims dipped to 327,000 from 333,000 in the prior week, while continuing claims climbed to 2.588 million from 2.523 million. Claims have basically vacillated in a range between 300,000 and 340,000 for the past two years.

* RealtyTrac reports that quarterly foreclosures came in at 635,159 in the most recent three-month period. That was up 30% from Q2 and double the level of a year ago.

* The outplacement firm Challenger, Gray & Christmas said job cut announcements declined 8.8% year-over-year in October. They also fell 12% from September. Financial firms led the way with announced cuts -- with 16,654 in October vs. 8,583 in September. The electronics, retail, and construction industries were also laying off workers.

* The Institute for Supply Management's manufacturing index slumped a bit more than expected -- to 50.9 in October from 52 in September (51.5 was the forecast). The production sub-index slumped below the 50 mark to 49.6, while the new orders sub-index fell to 52.5 from 53.4. The prices paid sub-index ticked up to 63 from 59.

Meanwhile, in other mortgage/financial/housing news, Citigroup is getting hammered on an analyst report that the global bank may need to raise $30 billion to shore up capital ... mortgage insurer Radian Group just reported a $704 million loss amid write-downs and losses related to the housing meltdown ... and Credit Suisse Group said profit tanked 31% amid write-downs on mortgage securities, CDOs, and leveraged loans.

I've been leaning bearish on bond prices (in other words, expecting prices to fall and rates to rise). But the long bond futures market is having a big rally today -- up more than a point at last count. Ten-year yields were recently off 10 basis points, retracing all of their post-Fed gains. Wild.


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