US markets got off to a strong start today after they averted
three consecutive lower closes on Friday, but the markets had a
nasty reversal in the afternoon and gave back a full percent worth
of gains. Yesterday, US markets were closed for Memorial Day while
European and Asian markets remained open. The Japanese Nikkei Index
fell 3.22% in Monday's trading and European indexes finished in
The S&P/Case-Shiller index of home prices showed the biggest
annual rate of gains in the past seven years. The 20-city composite
index for March rose 10.87% from last year, more than the 10.20%
consensus estimate and up from the prior month's 9.35% gain. The
Richmond regional manufacturing survey rose to a -2 reading in May,
up from -6 last month. The Dallas regional manufacturing survey
rose to a reading of -10.5 from -15.6 the month prior. Both surveys
were affected by rising activity associated with last month's
decline in inventories. The stand-out was the large gain in
consumer confidence, up to 76.2 in May from 69.0 last month. This
reading was at a five-year high, but given the large rally in US
equities, the correlation should come as no surprise.
Transportation stocks underperformed noticeably with stocks like
) remaining in negative territory throughout the day. Utility
stocks and REITs also continued to underperform the broader market.
Heavily shorted stocks like
) continued to soar on a bullish note from Goldman Sachs analysts.
Treasuries continued to remain under extreme pressure as agency
mortgage-backed securities (MBS) underperformed severely and
dragged the rate structure down as a whole.
Tomorrow's Financial Outlook
There will be no major economic data released tomorrow in the US.
The Mortgage Brokers Association will release its weekly home
purchase and refinancing index in the morning. The Treasury will
also auction $35 billion of 5-year notes.
Global economic data that will be released tomorrow includes German
employment figures, German consumer inflation, and the rate
decision from the Bank of Canada. The German unemployment rate is
estimated to stay unchanged from the month prior at 6.9% in May.
Germany's consumer inflation for May is expected to tick up to an
annual rate of 1.3% from 1.2% last month.
Notable earnings reports for tomorrow include
The Fresh Market