Dorchester Commercial Real Estate

U.S. Treasury securities were beaten down again on Tuesday at the hands of skittish bond traders. Upbeat economic and corporate news, the inability to rally in the face of bond-friendly reports such as tepid employment data and the bombings in London, and wariness about upcoming economic indicators put pressure on Treasuries from the start. Former Fed governor Ben Bernanke, who is now a White House economic advisor, added to the anxiety with his upbeat assessment of the natioin's economic health. In addition, there was a report that the European Central Bank may raise its inflation index due to the high price of oil.

Treasuries sold across the board, with prices plunging and yields, which move in the opposite direction of prices, climbing to their highest levels in weeks. In addition, there was no economic news to guide bond traders, so they were left to look elsewhere for guidance and found no reason to buy. The increase in yields has not yet influenced mortgage lenders to raise their rates, which remain steady. 0Mixed Day, Mixed Results on Wall Street

Wall Street opened to the downside - due partly to rising oil prices -- but the three major indexes climbed into positive territory for the last three hours of trading. The Dow Jones Industrials, however, slipped into negative territory just minutes before the closing bell. In spite of lackluster results, Wall Street appears to be optimistic about the economy and the slew of corporate earnings reports that will be released over the next few weeks. Strength in technology has led the markets over the past several sessions, and Tuesday was no exception. Gains in technology spread throughout the broader market.

The Dow Jones components were almost split between winners and losers, with 14 of the 30 components closing in positive territory. Home Depot posted a 2.5-percent increase, thanks to an upgrade based upon the continued surge in home improvement. Microsoft, Merck and IBM each added more than 1 percent. There were no huge losses among the Dow components, but Altria, 3M, Boeing, Caterpillar and United Technologies each shed upward of 1 percent. A positive for Wall Street was biotech giant Genentech's quarterly report, which not only beat estimates on earnings and revenue, but also provided an upbeat assessment for its current fiscal year.

The Nasdaq composite posted its fourth straight win, although it closed well off its high of the session. Of the tech bellwethers only Dell and Qualcomm closed in negative territory, but losses were small. JDS Uniphase led with a 3.2-percent gain, followed by Ericsson, which added 2.96 percent. IBM, Cisco Systems, Yahoo! and Microsoft each closed with gains in excess of 1 percent.

At closing: The Dow 30 Industrial Index fell 5.83 points or 0.06 percent to 10,513.89; the Nasdaq Composite index was up 7.72 points or 0.36 percent at 2,143.15, and the benchmark Standard & Poor's 500 Index gained 2.77 points or 0.23 percent to close at 1,222.21.

The 30-year Treasury bond was down 22/32 in price with the yield rising to 4.38 percent versus 4.34 percent at Monday's close.

The 10-year Treasury note was down 11/32 in price with the yield rising to 4.14 percent versus 4.09 percent at Monday's close.

The 5-year Treasury note was down 6/32 in price with the yield rising to 3.93 percent versus 3.89 percent at Monday's close.

AVERAGE mortgage rates (zero discount points) based on rates collected nationwide were:

The 30-year Conventional Fixed-Rate Mortgage was at 5.466 percent from 5.464 percent at Monday's close.

The 15-year Conventional Fixed-Rate Mortgage was at 5.049 percent from 5.059 percent at Monday's close.

Coming Up

The U.S. trade deficit for May will be released Wednesday morning - the first such economic news of the week. Analysts are expecting the trade gap to have shrunk to 2$56 billion in May, down from the $57 billion reported for April. The U.S. Import/Export Prices Indexes for June are also due. But what the markets, and especially the bond traders, are waiting for are Thursday's Retail Sales and Consumer Price Index reports for June. These data should provide insight into consumer spending and the presence of inflation. Due to the leap upward in Treasury yields, it is possible that mortgage rates could begin to edge up overnight and into Wednesday.

Carolyn Siegel

carolyn@interest.com

Source: Interest.com All rights reserved. Copyright Interest.com