BHBGroupTrader Weekly Market Spread Report: Issue 6 Equities Edition
The biggest story from last week, and one which I am monitoring very closely, is the rise of interest rates in the US. The Ten year treasury bond yield which stood at 3.16% a month ago has moved to 3.83% on Friday. The 30 year Treasury bond has moved from 4.06% a month ago to 4.6% on Friday The increase in rates is a major factor for US mortgage rates and for the hopeful turnaround in housing values and sales. US mortgage rates have jumped almost 28% during the past few weeks and this continues be a major factor for new homeowners who will need the incentive of low rates to be able to feel confident in buying a home.
This week we will get a good look at the health of the US consumer with May retail numbers on Thursday. Expectations are for an increase in sales of 0.5% versus a decline in April of –0.4%. The treasury is also continuing with some major bond auctions looking to sell $35 billion in 3 year notes on Tuesday, $19 billion in 10 year notes on Wednesday and $11 billion in 30 year notes on Thursday. The outcome of these auctions will be very important to watch for equity markets. Recent auctions have been very well received but traders are worried that the US might be going to the well too many times. The major trend-line for 30 year interest rates will need to be watched at 5.09% since it dates back to 1986 and if broken might signal higher rates for years to come. [...]
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