Bonds Take A Hit
Issue: 10/24/07 Wednesday
The big deal today was the Bond Market. It went down to 4.33%. Is this a clear indication that the bond players think the Fed will be lowering interest rates on Halloween?? Trick or Treat?? You decide.
The stock market didn’t move at all. It went way down, and ended 1 point lower than yesterday. Commodities moved up. Oil and gasoline went up because of the continued saber rattling by the Turks on the Iraqi border. In fact, they shelled the PKK (Kurdish terrorists) inside of
Here is what the market players were saying about bonds.
There was virtually nothing but bond positive news, and late session rumors of an emergency discount rate cut. That set-off a rally in stocks which in turn dogged bonds, in the face of Merrill, housing etc, etc, etc. One exasperated S&P player noted that “some of this is just guys covering,” adding, in some cases “just in case there is anything to it, this [rumor].” There were a lot of “Why wouldn’t they wait?” people out there along with a bunch of “What’s changed?” folks. The previous cut was preceded by a market “soothing” discount rate cut, the template for the rumor, but players are not quite buying it.
So now you get the true story of what happened today. There was a rumor of the Feds cutting the Discount Rate again, and that caused stocks to rise, and bonds to stop increasing in value. Aren’t rumors wonderful?? They move markets.
The other negative news today was that “used” houses were selling slower than anyone wants.
Sales of existing homes plunged by a record amount in September as turmoil in mortgage markets added more problems to a housing industry in its worst slump in 16 years. The National Association of Realtors reported Wednesday that sales of existing homes fell 8 percent in September, the largest decline to show up in records dating to 1999. The seasonally adjusted annual sales rate of 5.04 million existing homes was also the slowest pace on record. The weakness in sales translated into further pressure on prices. The median price — the point at which half the homes sold for more and half for less — fell to $211,700 in September, down by 4.2 percent from the sales price a year ago. It marked the 13th time out of the past 14 months that the year-over-year sales price has decreased.
The 8 percent decline in sales was bigger than the 4.5 percent decline that had been expected.
Here are Wednesday’s closing details:
DJ30 – 13,675 (Down 1 point)
10 year US Treasury Bond – 4.33% (Down 0.07%)
Euro 1.4259
Gold closed at $766 per ounce. (Up $3)
Oil Closed at $87.10 (Up 1.83) - I hate these dollar jumps in oil.
Gasoline is $2.15 (Up 0.04)
