Dedham Condominiums

U.S. Treasury securities posted additional gains on Friday, closing out a good week. The catalyst for buying government issues today was the Durable Goods Orders report, which looked strong on the outside, but contained disappointing data. There was a similar read on New Home Sales, which at first glance appeared to rise but actually fell due to revisions.

These reports encouraged traders to believe that soft numbers could result in the Fed's winding down its rate-hike program. Although the dollar lost some ground due to today's economic indicators, its strength against the euro and the yen has brought buyers into the market. Today's mini-rally sent Treasury prices up and their yields, which move in the opposite direction of prices, down. This allowed mortgage lenders who base their rates on yields hold them steady.

Orders for durable goods, big-ticket items meant to last more than three years, rose 5.5 percent in May - far above the forecast for a 3.0-percent increase, and significantly higher than the downwardly revised 1.4-percent gain in April. However, the increase in durables was largely due to increased orders in commercial aircraft. Excluding transportation, durables fell 0.2 percent - the third decline in four months and well below the estimate of a 0.5-percent increase.

New Home Sales for May rose 2.1 percent to an annual rate of 1.298 million units. This data, however, was less rosy than it appeared due to downward revisions of sales data for the past three months. Expectations of a 0.3-percent increase were abandoned with the reshuffling of sales stats. Both the average and median sales prices fell in May. While the sales price dipped by $1,100 to a national average of $282,500, the median sales price fell to its lowest level in eight months. The median price of $217,000 means half the homes sold for more while the other half sold for less.

Stocks Close Out a Tough Week

The Dow Jones Industrials closed in negative territory every day this week - something that hasn't happened in more than six months. The steady climb in oil prices has kept unrelenting pressure on the equity markets, which also are on edge due to a number of disappointing earnings reports and warnings. Investors fear that high oil prices will dent corporate profits, cut into consumer spending and slow the economy -- all negatives for stocks.

Only five Dow Jones Industrials issues closed positive on Friday, and those gains were modest. Johnson & Johnson and GM posted the biggest increases, but none were close to 1 percent. Six components lost more than 2 percent, including Alcoa, Hewlett-Packard, Intel, Merck, Home Depot and Coca-Cola. Homebuilders, most of which trade on the NYSE but are not Dow Jones components, also traded down due to disappointing housing sales.

The Nasdaq composite also landed in negative territory, with networkers and semiconductors having a tough day. All tech bellwethers closed in negative territory led by 2-percent losses by Intel and Cisco Systems. Qualcomm and IBM each dropped more than 1 percent.

At Closing:

The Dow 30 Industrial Index fell 123.60 points or 1.19 percent to end at 10,297.84; the Nasdaq Composite index lost 17.39 points or 0.84 percent to close at 2,053.27, and the benchmark Standard & Poor's 500 Index closed down 9.16 points or 0.76 percent to end at 1,191.57.

The 30-year Treasury bond was up 18/32 in price with the yield falling to 4.22 percent versus a 4.25-percent closing on Thursday.

The 10-year Treasury note was up 9/32 in price with the yield falling to 3.91 percent versus a 3.95-percent closing on Thursday.

The 5-year Treasury note was up 5/32 in price with the yield falling to 3.69 percent versus a 3.73-percent closing on Thursday.

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

The 30-year Conventional Fixed-Rate Mortgage was at 5.383 percent from 5.391 percent at Thursday's close.

The 15-year Conventional Fixed-Rate Mortgage was at 4.958 percent from 4.956 percent at Thursday's close.

Coming Up

June ends with a wealth of economic reports, but they will be trumped by the Fed's June 30 decision on interest rates. There are no economic reports due on Monday, but they begin to ramp up on Tuesday with the release of the Conference Board's Consumer Confidence report. Releases on manufacturing, personal spending and the final revision of first-quarter GDP are all scheduled. Over the weekend and into Monday mortgage rates should remain near present low levels due to steady buying in Treasuries today.

Carolyn Siegel

carolyn@interest.com

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