The Economy Guy

Issue: 9/27/07 Thursday

Another ho-hum day in the stock market, but the bond market has started its recovery, and oil spurted up $2.58 today. The Euro hit a new high, and fell back again.

The bond market made its way back to the plus side after a long, dull slog through territory that included bond positive data & a solid Fed auction. The short stuff led the way back, but it was no simple task even in the face of all that creamy bond filling. There will be an actual run of data tomorrow but the whole “Poor report? Eh. Yeah…saw that coming” attitude will likely prevail in trade, as mid-level data will play a minor role with players already taking shots at what the payrolls number will look like next week. A significant miss on jobless claims combined with a huge sucking sound coming from new home sales will help bond prices, but any negatives will need to see some response in the ether of equity world in order for the upside to grab & hold.

Tomorrow has final Q2 GDP, initial jobless claims (8:30) along with new home sales (10:00). New Fed-sters Rosegren (Boston) & Evans (Chicago) talk early while chief Bernanke goes at 13:00.

New-homes sales tumbled in August to the lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump. Sales of new homes dropped by 8.3 percent in August from July, the Commerce Department reported Thursday, driving down sales to a seasonally adjusted annual rate of 795,000 units. The median sales price in August fell by 7.5 percent from a year earlier to $225,700. That was the biggest drop in percentage terms in nearly 37 years.

The economy’s 3.8 percent GDP growth rate in the April-to-June quarter was the strongest showing in just over a year. Although the new reading for the second quarter was slightly less robust than a previous estimate of a 4 percent growth rate, it nonetheless marked a substantial improvement over the feeble 0.6 percent growth rate registered in the prior quarter. Gross domestic product is the value of all goods and services produced within the United States and is considered the best barometer of the country’s economic health.

Here are Today’s closing details:
DJ30 – 13,878 (Up 100 points, or 0.72%)

10 year US Treasury Bond – 4.62% (Up 0.01%)

US Dollar - $1.4128/Euro.Gold closed at $736 per ounce. (Down $3)

Oil Closed at $80.30

Gasoline is $2.03