January 26th, 2011 10:26 AM by BILL WILBANKS
After the Presidential address last evening it looks like a ho-hum morning so far. Several items to watch today start with the New Home Sales report at 10 am and little is expected that's not already baked in. There's two Fed auctions the 5yr T Notes today at 1 pm and the 7yr tomorrow. Yesterday the 2yr was a yawn. If the 5yr demand is strong by investors today we could see a rally and lower rates. If not, it could lend to bonds selling off and higher rates. Also, though the first meeting of the new year which started yesterday brings in new voting members into the mix little is expected to change from the current path set last year by Chairman Bernanke relating to Fed easy policys now in place. The statement will be read at 2:15 today as usual. As always it's as much about what they do or don't say as it is how they say it that the market watches for future direction hints. Nationally applications were reported down almost 13% last month as rates rose sharply in December for the first time in about 6 months. We seem to always be one news cycle away from another rate increase nowadays and then everyone is "shocked it happened". Are your ducks in a row? Waiting for today's first rates right now...
10 AM - first sheets out look like price (points) up 0.125% to 0.25% at first blush with 10yr at 3.39% after closing yesterday at 3.3342%. December new homes sales were reported at an annualized 329,000 a pretty good change from November's annualized number of 280,000 that had been unchanged from the month before. My personal comment on this would be to remember the big jump in rates we saw in November (still had a 4.25% rate on 11/10) through the first two weeks in December that brought rates up to edge of 5% before settling back slightly to an average of around 4.75%. That alone in my opinion would have been a strong rationale to kick a few more fence sitters off the pickets. Not to mention potential buyers wanting to get er done before the holidays even though the 329k figure is within a group of only 5 years that has been that low since the 1960's. According to CNBC 4 of those were in the last 5 years. It's something.