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Prices of Treasury coupon securities are virtually unchanged today as participants await Godot and the long holiday weekend. The yield on the benchmark 2 year note increased one basis point to 2.33 percent. The yield on the 5 year note increased the same amount to 3.05 percent. The yield on the 10 year note is unchanged at 3.78 percent and the yield on the Long Bond is unchanged at 4.39 percent.The FOMC released the minutes of its August 5th meeting today. The solons who gathered that day agreed that the next move in rates would be higher. However, they did not put that in the context of a time frame.

It is easy to read through the minutes and conclude that the rate hike will not be soon. They note that because of constrained financial conditions the current stance of policy is not especially accommodative. They expect economic activity to remain muted for several quarters and they expect moderation in inflation.

Since they met oil has plummeted in price and financial stress and strain has intensified. Along the way, the dollar has had a prodigious rally. Inveterate bond vigilantes Stern and Fisher have softened their tone.

I think it is safe to say that the funds rate will be at 2 percent for a very long time.

The FDIC released a quarterly report on the state of the banking system. If you have children do not allow them to read the report as it is right out of a scary movie.

Banks earned only $5billion in Q2 which was the lowest point point for that number since 1991. The report showed the highest level of non current loans since 1993.

Total assets declined by $68.6 billion.

Economic data released today once again paint a weak picture of the economy.
The Case Shiller data chronicles that housing prices have tumbled 18 percent from their peak. I think that the best one can say about this report is that the rate of deterioration of prices has slowed but one cannot conclude that the bottom has been attained.

Consumer confidence jumped but that was a function of the decline in gas prices. Ominously, the jobs hard to get item points to more weakness in employment in coming reports.