A Loaf of Bread for Z$200 Billion? Now That’s Inflation

Zimbabwe is the latest example of what happens when inflation spirals out of control to the point of hyperinflation. With the highest rate of inflation in the world - about 2.2 million per cent - Zimbabwe last week issued a Z$100 billion note, though still not enough to buy a ...

Greenspan Says Regulator Role Will Undermine Fed’s Credibility

In an interview on CNBC, Former Federal Chairman Alan Greenspan warned that if the Federal Reserve is given a role to oversee the financial system it could undermine its credibility. Greenspan said the US is facing a "once in a century crisis." He warned that the U.S. teeters on the brink ...

TSY’s Paulson Says Stimulus Has Helped U.S. Economy

Speaking before the Exchequer Club of Washington, U.S. Treasury Secretary Henry Paulson said the stimulus package has supported the economy in the last year. Paulson said market turmoil and energy prices have dragged on the economy, while the labor market has softened... Read More Now

Chicago Business Barometer Bounces into Growth, Prices at 28-Year High

The ISM-Chicago business barometer bounced into growth mode in July following five months of slowdown. The growth was led by advances in production and new orders, even as prices hit a 28-year high and employment remained in contraction for the eighth straight month. Read More Now

After Weak U.S. Second-Quarter GDP, Economists Say Worse to Come

Economists say the reported 1.9% GDP growth for the second quarter of 2008 was boosted by a 1.5% increase in consumption and a 2.4% gain in net exports. The figure was lower than expectations, however, as inventories saw a sharp reduction. Aside from the headline, the big news came from revisions ...

GDP Rises 1.9% in Q2, Revisions Include Negative Quarter in Q4 2007

The advance U.S. GDP report came in lower than expected for the second quarter of 2008, rising by 1.9% against expectations of 2.3% growth, according to the Bureau of Economic Analysis on Thursday. Revisions showed the U.S. economy shrank 0.2% in the fourth quarter 2007. The negative figure is the first ...

Freddie Mac Doubles Financial Incentives to Servicers Who Help Borrowers Avoid Foreclosure

Freddie Mac today told mortgage servicers it was doubling the amount of money it pays for each workout that keeps a delinquent borrower with a Freddie Mac-owned mortgage out of foreclosure. Freddie Mac also announced it will start reimbursing servicers for the cost of door-to-door outreach programs, give servicers more time ...

MBA Mortgage Applications Move Down in Week Ending July 25

Weekly mortgage applications declined in the week ending July 25, according to data released from the Mortgage Bankers' Association (MBA) on Wednesday, which reported a 14.1% week-over-week fall in applications. In the previous week, applications fell 6.2%. Read More Now

Hope Now Alliance Saves 1.9 Million Homes From Foreclosure

Mortgage service providers have staved off the foreclosure of 1.9 million homes in the past year in what has been the largest bailout the housing industry has ever seen, according to Hope Now, the private sector alliance of mortgage service providers, counsellors and investors... Read More Now

Fed to Conduct Liquidity Operations Through January 2009, Introduces 84-Day TAF

In addition to the $75 billion 28-day Term Auction Facility (TAF), the Fed will also be conducting a $25 billion 84-day TAF to address the ongoing "fragility" of the financial system. The Fed also said it would be extending its extraordinary lending to late January 2009. "In light of continued ...

Preview: Second Quarter GDP Expected to Post 2.3% Growth

The consensus forecast expects U.S. GDP growth to come in quite a bit better than the two previous quarters, as exports have surged on the weak dollar and the fiscal stimulus package has provided a boost to consumption. The advance Q2 GDP report is expected to show growth of 2.3% in ...

SEC Extends Rule Limiting Short Selling Until August 12

On Tuesday evening, the Securities and Exchange Commission extended its emergency rule limiting short selling of Fannie Mae, Freddie Mac and 17 brokerage firms to Aug. 12. "The commission will continue exploring other remedies for the broader marketplace to further protect inventors from distort and short artists," said SEC Chairman ...

New 2008 Highs for Mortgage Rates

Fixed-rate mortgages (FRMs) hit the highest levels of 2008 during the week ended July 24 according to Freddie Mac's Primary Mortgage Market Survey. "Market concerns about rising inflation and the greater probability that the Federal Reserve (Fed) will raise short-term rates this year all combined to push mortgage rates higher this ...

CIBC’s Rubin Sees U.S. Inflation Hitting 6%

Headline inflation in the United States could be headed as high as 6% before the end of the year, CIBC chief economist Jeff Rubin warns in a forecast published Wednesday. "We haven't seen a 6% CPI inflation rate posted in the U.S. since 1990 and even then only briefly for four ...

The Home Equity ATM Machine Slows in First Half of 2008

Whatever else is going on in the housing market, it appears that Americans are no longer using their homes as gigantic credit cards to finance new cars, tuition, and vacations. Freddie Mac's report on cash-out refinancing for the first half of 2008 showed that the number of homeowners taking that option ...

Wednesday’s Events: ADP Employment, Cdn Five-Year Bond Auction, DOE Oil

The ADP employment report will be the most closely looked at economic event of the day ahead of Friday's U.S. nonfarm payrolls. In Canada, markets will receive industrial product and raw material prices for June followed by an auction of five-year government bonds. Meanwhile, energy traders will be looking at ...

Economist Calls U.S. ADP Employment Report “Grossly Over-Optimistic”

Following the release of the ADP private employment report on Wednesday, which posted a gain of 9k jobs in July, economists dismissed the figures as overly optimistic and predicted they won't be reflected in the BLS nonfarm payrolls survey on Friday. Speaking on CNBC, Joel Prakken, chairman of Macroeconomic Advisors and ...

Are Rumors Rather than Reality Feeding Market Behavior?

Is it possible that some of the collapses and near misses in the financial markets over the last six months will ultimately be tied to a few sick and/or greedy people who have used rumors and innuendo to manipulate the market? Government regulators are looking at such a scenario starting ...

U.S. Consumer Confidence Improves to 51.9 in July

The Conference Board's consumer confidence index for July improved to 51.9 in Tuesday's report, against expectations of a slight decline to 50.0. Some economists were expecting such an improvement following the upward revisions in the Reuters/U of Michigan sentiment index last week, which bumped up to 61.2 from the preliminary ...

Case-Shiller U.S. Home Price Index Declines by Record Annual Levels in May

The S&P Case-Shiller U.S. home price index continued to deteriorate in May as the 20-city composite index posted a record annual decline of 15.8%. The Case-Shiller index has fallen every month since peaking in July 2006. The month-over-month decline in home prices was 0.9%, compared to the 1.3% loss in the ...

Tuesday’s Events: U.S. Consumer Confidence, S&P/CS House Prices

Consumer confidence for July and the S&P/Case- Shiller's home price index for May will be the main focus of Tuesday's economic events with no major macroeconomic releases expected for Canada. Across the Atlantic, market participants will also be looking out for preliminary results of German CPI for July. Read More ...

U.S. Treasury Will Borrow Record Amount for Second Fiscal Quarter

The U.S. government plans to issue more debt in the current quarter than any time in history, the Department of Treasury said on Monday. Read More Now

White House Revises 2008, 2009 Budget Deficit

The White House revised its 2008 budget deficit forecast to $389 billion from $410 billion earlier in February and its 2009 forecast to $482 billion from $407 billion, far above the all time record of $413 billion seen in 2004. Read More Now

Paulson Encourages Covered Bond Market to Increase Mortgage Financing

Treasury Secretary Henry Paulson said Monday that covered bonds are an answer to financial market's request for clarity. He said covered bonds, a $3 trillion market used widely in Europe for mortgage funding, can develop without legislation in the U.S., and four of the largest U.S. banks are already prepared ...

Fed’s Stern Says Credit Crunch to Last Longer, Could Get Worse

In an interview with the Financial Times over the weekend, Minneapolis Fed President Gary Stern (voter) said the credit crunch in the U.S. would last for several more months and conditions could deteriorate further. Read More Now

U.S. Dollar Under Downward Pressure to Start Week

The U.S. dollar was mixed on a quiet day on Monday, making gains solely against the underperforming Canadian dollar and British pound. "The US$ is starting the week off on a weaker note, losing ground against almost all the majors," wrote BMO Capital Markets' Benjamin Reitzes... Read More Now

IMF Global Financial Stability Update Says Markets Remain Fragile

Credit risk remains elevated and appetite for risk remains subdued, though the systemic risk to financial markets is not as elevated as it was in the spring, according to a new market update from the International Monetary Fund. "Global financial markets continue to be fragile and indicators of systemic risk remain ...

U.S. Housing Bill Goes to President’s Desk

In a rare weekend meeting, the U.S. Senate passed the housing bill by 72-13 votes. The legislation now awaits the signature of U.S. President George W. Bush, who could sign it into law as early as this week. The bill would aid over 400,000 mortgage borrowers with the FHA assuming up ...

Final University of Michigan Consumer Sentiment Reports Surprise Upward Revision

The final consumer sentiment survey from Reuters and the University of Michigan received a large upward revision from preliminary estimates in July, with the headline indicator coming in at 61.2 compared to the preliminary 56.6 level. Read More Now

Foreclosures Spike by 121% from Previous Year, Says Report from RealtyTrac

U.S. home foreclosures soared by 121% in second- quarter year-over-year results, according to a report issued by RealtyTrac. There were 739,714 foreclosure filings in the second quarter of 2008, a 14% quarterly increase. According to RealtyTrac, 48 of 50 states and 95 of 100 of the largest metropolitan areas experienced year-over-year increases ...

New Home Sales Higher than Expected Due to Revisions in May, April

New home sales fell for the seventh of the past eight months in June, falling by 0.6% to an annual pace of 530k sales. This rate is much higher than consensus expectations due to major revisions in the previous two months, according to the U.S. Census Bureau on Friday. ...

Revisions Boost New Home Sales, Suggest Stabilization, Economists Say

U.S. new home sales fell marginally in June but the pace was much higher than expected due to +50k of revisions over the past three months. Economists were surprised by the report and said it may be a tentative sign of stabilization, though more data will be needed to confirm ...

Second Quarter Vacancy Rates Slip from Previous Quarter

The U.S National homeowner housing vacancy rate slipped to 2.8% in the second quarter, a 0.1% decline from the previous quarter's 2.9% rate, according to the U.S. Census Bureau report released on Thursday. Read More Now

Thousands of Felons Issued Mortgage Licenses in Florida

The Miami Herald's investigative team reported on Sunday that the state has approved over 10,000 mortgage broker licenses for convicted felons since 2000; over 4,000 were issued to individuals who had been convicted of crimes such as fraud, extortion, racketeering, and bank robbery

SEC Chairman Cox Wants More Regulatory Authority Over Investment Banks

Testifying before the House Financial Services Committee, SEC Chairman Christopher Cox said he needs more authority to have mandatory supervision of investment banks. "Legislative improvements are necessary," said Cox in his opening remarks. "The Commission should be given a statutory mandate to perform this function at the holding company level, along ...

No End in Sight for Housing Market

"The U.S. housing market continues to be very weak, and with the inventory of unsold homes continuing to rise we are unlikely to see any meaningful turnaround in the sector in the near term," said Millan Mulraine, economics strategist at TD Securities. The NAR said foreclosures represent one-third to 40% of ...

NY Fed’s Geithner Says Judgment on Regulatory Bill Should Be Held

"The U.S. and global financial systems are going through a very challenging period of adjustment. The critical imperative today is to help facilitate that adjustment and to cushion its impact on the broader economy. The forces that made the system vulnerable to this crisis took a long time to build ...

New York Sues UBS Over Auction Rate Securities

New York Attorney General Andrew Cuomo said he is suing UBS AG for misleading investors into buying auction-rate securities just five months before the market collapsed. "Not only is UBS guilty of committing a flagrant breach of trust between the bank and its customers, its top executives jumped ship as soon ...

Existing Home Sales Fall 2.6% to 4.86 Million in June

U.S. existing home sales fell 2.6% to 4.86 million units in June following May's unrevised sales figure of 4.99 million. This is the fourth month home sales have remained under the five million mark, according to the National Association of Realtors (NAR). Read More Now

Soaring U.S. Jobless Claims Viewed as Reliable Indicator of Weak Labour Market

Initial claims for unemployment benefits in the United States soared to 406k in the week ending July 19, the highest level since March, according to the Department of Labor on Thursday. Economists said July data has been volatile, but the latest data is a reliable indicator of weakness in the ...

Thursday’s Events: U.S. Jobless Claims, Existing Home Sales, Fed’s Geithner

U.S. jobless claims and existing home sales will dominate the scheduled events of the day, along with testimony from New York Fed President Timothy Geithner (voter) and SEC Chairman Chris Cox. Meanwhile, European markets will be paying attention to the release of the Belgian business confidence index and comments from ...

Treasury Secretary Paulson Pleased Housing Bill Passed House Quickly

After the U.S. House of Representatives passed a housing bill including provisions for the creation of a new GSE regulator and a liquidity backstop to help the beleaguered Fannie Mae and Freddie Mac, U.S. Treasury Secretary Paulson expressed his gratitude for the bill having passed quickly. "As I have said before, ...

U.S. Fed’s Beige Book is Downbeat, But Few Surprises

Economic conditions across the U.S. "slowed somewhat," according to the Fed's Beige Book on Wednesday. Five of the 12 districts were said to have weakened since the last report six weeks ago, while Chicago's economy was "sluggish" and growth in Kansas City had moderated. The remaining three districts saw slight ...

Plosser Says Rate Hike is Inevitable Even if Housing Prices Continue to Fall

Speaking in a Bloomberg Television interview, noted hawk Philadelphia Federal Reserve President Chuck Plosser said the Fed may have to hike rates even as housing prices continue to fall. Plosser commented that the economy has not changed much in the last few months and that rising prices pose the biggest challenge ...

MBA Mortgage Applications Move Down in Week Ending July 18

Weekly mortgage applications in the United States declined in the week ending July 18, according to data released from the Mortgage Bankers' Association (MBA) on Wednesday, which reported a 6.2% week-over-week fall in applications. Read More Now

Treasury’s Paulson Says it Was Easy to Recommend President Sign Housing Bill

Although he is not pleased with some parts of the housing bill, U.S. Treasury Secretary Henry Paulson said it was easy for him to recommend to President George W. Bush to sign a housing rescue package into law on Wednesday. Read More Now

Mortgage Rates Fall in Response to Speculation about Overnight Bank Rates

Rates for both short- and long-term mortgages tumbled last week according to Freddie Mac's Primary Mortgage Market Survey. The Mortgage Bankers Association (MBA) released the results of its Weekly Mortgage Applications Survey for the week ended July 18 on Wednesday. Mortgage activity as measured by the volume of loan applications... ...

Wednesday’s Events: Canadian CPI, DOE Oil, Fed’s Beige Book

Canadian CPI tops the economic news of the day as markets receive the Fed's Beige Book and the Department of Energy's weekly oil inventories. In the afternoon, markets will also be paying attention o the sales of $31 billion in two-year Treasury notes. In the U.S., the Mortgage Bankers Association ...

Fed Discount Meeting Minutes See Fed Majority Take a Wait-and-See Approach

The Federal Reserve Board Discount rate meeting minutes from May 19 and June 23 show that ten out of twelve reserve banks voted to leave the discount rate unchanged. The Dallas Fed and the Kansas Fed requested to have the discount rate increase by 0.25%. Read More Now

Banks, Trade Groups Say that SEC Order Does Not Go Far Enough

Less than a week after Securities and Exchange Commission Chairman Christopher Cox invoked the Commission's emergency powers to regulate short selling of certain stocks including Freddie Mac and Fannie Mae, complaints were surfacing from financial institutions. The complaints were not because those financial institutions were on the list of troubled ...

House Prices Falls Less Than Expected in May, According to OFHEO

U.S. house prices fell 0.3% month-over-month in May following April's 0.8% pullback, the Office of Federal Housing Enterprise Oversight (OFHEO) reported Tuesday. The consensus had been looking for a 0.8% month-over-month pullback in May. "It is very hard to draw conclusions from a one-month number, especially in these uncertain times; but the ...

Tuesday’s Events: OFHEO Housing Index; Fed’s Plosser

Canadian retail sales and employment insurance data tops the economic news for the day as U.S. markets will receive the OFHEO's housing market index, along with the Richmond Fed's manufacturing index and comments from Treasury Secretary Henry Paulson and Philly Fed President Charles Plosser (voter). Read More Now

Fed’s Plosser Calls for a Reversal in Monetary Policy

Inflation in the U.S. is "too high" and inconsistent with the goals of the Federal Reserve, whose accommodative policy must be reversed, said Charles Plosser, President of the Philadelphia Fed, on Tuesday. Plosser, a well-known inflation hawk, said monetary policy is too loose and the Fed will likely have to hike ...

Tsy Secretary Paulson Says Fannie and Freddie Vital to Financial System

Speaking at the New York Public Library, U.S. Treasury Secretary Henry Paulson said Fannie Mae and Freddie Mac are vital to the U.S. financial system, and that he remains confident Congress will pass GSE legislation sometime this week. "Because of their size and scope, Fannie and Freddie stability is critical to ...

Treasury’s Ryan Expects GSE Legislation to Pass Soon

Speaking in Boston at the Managed Funds Association Seminar on Sound Practices for Hedge Fund Managers, Acting Undersecretary for Domestic Finance Anthony Ryan said on Monday he expects GSE legislation to be passed soon by Congress. Read More Now

Treasury Secretary Paulson Campaigns for GSE Bailout Plan

Speaking in multiple interviews over the weekend, U.S. Treasury Secretary Henry Paulson continued to push for his plan to provide an unlimited line of credit to government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to prevent the institutions from going under. Read More Now

Fed Watch: Bernanke Testimony Focuses on Growth, FOMC Minutes Released

Current Rate: 2.00% Next Rate Decision: Aug. 5 Market Expectations: The OIS implied rate suggests markets are 16% priced in for a 25bp hike at the next meeting and are pricing in a 41% chance of a quarter-point hike at the September meeting. Last week was a fairly busy week for ...

Scotiabank Says Measures Will Not Prevent U.S. Economic Slowdown

According to Scotiabank's Global Outlook released Monday, sharp monetary policy easing, a generous fiscal stimulus package and massive liquidity injections are not sufficient to ward off a deterioration in U.S. economic conditions as the subprime crisis continues to take its toll on the economy and government spending soars to unprecedented ...

Could FDIC also be a “Predatory lender?”

The Wall Street Journal reported Monday morning that the Federal Deposit Insurance Corporation (FDIC,) rather than being part of the solution to the subprime mortgage crisis, was actually among those institutions that caused it. Superior Bank was, in the early 2000s, a leading subprime lender and that operation continued, under FDIC ...

The Week Ahead: U.S. Housing Data and Canadian Inflation

According to economists and strategists, the U.S. housing market is going to be the top news in the U.S. Along with new and existing home sales, the Fed beige book and the durable goods report will provide important glimpses into the economy. In Canada, markets will pay attention to retail ...

Bad News is Good News as Market Reacts to Citigroup, J.P. Morgan Earnings

Two Wall Street giants and their investors are betting that one of the Streets most baffling rules of thumb will prevail as the stock market prepared to open Friday after two days of a bullish market. The rule, one that definitely does not apply to your family finances, is if bad ...

Fed’s Stern Says Fed Can’t Wait for End of Crisis to Raise Rates

Speaking in an interview with Bloomberg on Friday, Minneapolis Federal Reserve President Gary Stern (voter) said that the Federal Reserve can't wait for the end of the crisis to raise rates. "I worry about the prospects for inflation, the headline inflation rate is clearly too high," said Stern. Stern noted that the ...

Thursday’s Events: BOC MPC Report, U.S. Jobless Claims, Philly Fed Mfg Report

International securities transactions and the Bank of Canada's monetary policy report highlight today's Canadian economic releases as U.S. markets receive jobless claims and housing starts, followed by the Philadelphia Fed's manufacturing report for July. Read More Now

U.S. Jobless Claims Rise to 366K in Week Ending July 12

Initial claims for unemployment benefits in the United States rose much less than expected to 366k in the week ending July 12, following a slightly revised 348k in the previous week. Continuing claims fell back 81k to 3.122 million for the week ending July 5, the Department of Labor reported ...

Fed’s Kroszner Says Fed Rules Will Affect Subprime and Alternative Mortgages

Delivering comments at the FDIC's Minority Depository Institutions National Conference in Chicago, Fed Governor Randall Kroszner said the Fed's new rules on mortgages would alleviate pressures in nearly the entire subprime sector and some other alternative mortgage markets. "At the core of our program, we have implemented a series of web-based ...

U.S. Housing Starts and Building Permits Soar in June

Due to a change in the housing code of New York City, U.S. housing starts came in above expectations at 1066k in June, a month- over-month rise of 9.1%, according to data released from the U.S. Department of Commerce on Tuesday morning. The consensus was looking for a decline to a ...

Preview: Housing Starts Expected to Drop 15k in June

Following a lower-than-expected level of housing starts and permits in the May report, plus a major downward revision in the month before, economists are expecting June's housing starts and permits figures from the Department of Commerce to continue declining. Read More Now

NAHB Builder Confidence Reaches New Historic Low at 16

A report from Wells Fargo and the National Association of Home Builders (NAHB) suggests that homebuilders were even more pessimistic in July as the housing market index fell two points to 16, creating a new historic low in the 22-year index. Read More Now

Higher U.S. CPI, FOMC Minutes Lead to Greater Chance of Rate Hike

Fed fund futures showed a slightly heightened risk of a rate hike in 2008 by the Federal Reserve, following a higher-than- expected CPI print for June on Wednesday. Markets were subsequently forecasting a 44% chance that the Federal Open Market Committee (FOMC) would hold rates at 2.00% at the Dec. 16 meeting. ...

Fed Minutes Say Next Move Could Be Higher Funds Rate

The minutes of the Federal Open Market Committee's (FOMC) June 24-25 meeting show that FOMC Board Members agreed upside risks to inflation had increased and generally agreed downside risks to growth had diminished. Most members thought the current 2.00% target rate was appropriate but that risks to inflation may initiate ...

U.S. June Core CPI Up 0.3% as Total Inflation Surges 1.1%

The seasonally adjusted U.S. Consumer Price Index rose more than expected on both fronts, as the core rate ticked up 0.3% (0.323%) in June, contributing to a 2.4% year-over-year change, and total inflation rose 1.1% (1.056%) in the month and 5.0% on the year, according to data released by the ...

Despite Market Turmoil, Mortgage Rates Remain Becalmed

According to Freddie Mac's Primary Mortgage Market Survey for the week ending July 10, there was little change in either short or long term mortgage rates. The Mortgage Bankers Association released this week's figures Wednesday morning. MBA's Weekly Mortgage Applications Survey for the week ended July 11 reported that... ...

Wednesday’s Events: Bernanke Part II, U.S. CPI, DOE Oil, Cnd Mfg Shipments

Another action-packed day follows Tuesday's excitement as Fed Chairman Ben Bernanke delivers the second of his two- day annual testimony, this time to the House of Representatives. In terms of data, markets will receive Canadian manufacturing shipments along with U.S. CPI and industrial production figures followed by the all important weekly ...

U.S. President Bush Asks Congress to Do More

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Bernanke Says Housing Crisis is Central Issue to Economy

In a question and answer session with the Senate Banking Committee at the Humphrey-Hawkins testimony, Federal Reserve Chairman Ben Bernanke said the central issue in the U.S. economy is the housing market. Read More Now

Tuesday’s Events: Bernanke’s Semi-Annual Testimony, PPI

The Bank of Canada's rate decision and semi-annual testimony from Fed Chairman Ben Bernanke are the main events of what is looking to be an action-packed Tuesday. Markets will also be treated to the Canadian new motor vehicle sales, U.S. PPI and the Empire Fed's manufacturing index. ...

Paulson Says GSEs Need a Strong Regulator

Speaking to the Senate Banking Committee as part of the Humphrey- Hawkins testimony, Treasury Secretary Henry Paulson said government-sponsored enterprises (GSEs) need a strong regulator. "Market stability and support for housing finance are among my highest priorities during this time of stress in our markets. Therefore, after consultations with the Federal Reserve, ...

June All-Items PPI Soars 1.8%, Core Contained at 0.2%

The U.S. Labor Department's seasonally-adjusted core measure of producer price inflation grew at 0.2% month-over-month in June, the same pace as the previous month, while the headline measure moved up by 1.8%, four-tenths higher than consensus. From a year ago, the core measure of producer price inflation was up 3.0%, two-tenths ...

Economists Call Core Inflation ‘Tame’ Despite Soaring Energy Prices

Economists say the main story in June's producer price index is that core prices, which exclude food and energy, remain contained despite soaring costs from energy driving up the headline index. The U.S. Labor Department's seasonally adjusted core measure of producer prices rose by 0.2% in June, lower than the ...

Bold, Creative, Aggressive Policy Action Needed for GSEs to Survive

Brian Bethune, chief U.S. financial economist at Global Insight, said "Bold, creative, aggressive policy action is needed for the GSEs to survive in their current capacity as private entities, and it is needed now." He called the capitalization-crisis of Fannie Mae and Freddie Mac a "potentially dangerous turn of events ...

Bernanke says U.S. Economy is Facing Numerous Challenges

Appearing before the Senate Banking Committee at the semiannual Humphrey-Hawkins testimony on Tuesday, Federal Reserve Chairman Ben Bernanke said the economy is facing numerous difficulties. "The U.S. economy and financial system have confronted some significant challenges thus far in 2008.The contraction in housing activity that began in 2006 and the associated ...

Bernanke Expected to Focus on Inflation at Semi-Annual Testimony

A hawkish testimony and mostly unchanged rhetoric are expected from Fed Chairman Ben Bernanke on Tuesday, as the head of the U.S. central bank delivers the first of a two-day semiannual testimony to congress. "In the US, all eyes will be on Ben Bernanke as he appears before Congress on Tuesday ...

Paulson and Bernanke Come to the Rescue of Fannie Mae and Freddie Mac

The U.S. government flew to the rescue of GSEs Fannie Mae and Freddie Mac over the weekend with Treasury Secretary Henry Paulson announcing that the government would increase the failing bond insurers' line of credit, have the temporary ability to purchase equity and that the Fed would be available to ...

Action-Packed Week for U.S. and Canadian Markets

According to strategists and economists, markets will be looking for some direction next week with the release of major economic reports. In the U.S., markets will receive PPI, CPI, retail sales, FOMC minutes and regional manufacturing reports on top of Fed Chairman Ben Bernanke testifying before Congress and the Senate. ...

Regulators Hasten to Assure Depositors that their Money is Secure as IndyMac is put into Receivership

Federal regulators and Bush Administration officials spent the weekend reassuring bank depositors nationwide that their deposits are secure and, as the ads say, insured by the Federal Deposit Insurance Corporation (FDIC). The public information campaign was launched to quiet fears that were stoked by the failure of California-based IndyMac late Friday. ...

Fed is Moving into Consumer Protection Role on Mortgages

Speaking at the Federal Reserve open meeting on mortgage rules, Federal Reserve Chairman Ben Bernanke said the new rules will be aimed at protecting consumers from deceptive practices. Bernanke said that the new rules would apply to all mortgage lenders, as delinquencies and foreclosures continue to grow rapidly. Bernanke pointed to ...

Preview: Inflation Focus at Bernanke’s Semi-Annual Testimony, Say Experts

A hawkish testimony and mostly unchanged rhetoric are expected from Fed Chairman Ben Bernanke on Tuesday, as the head of the U.S. central bank delivers the first of a two-day semiannual testimony to congress. "In the US, all eyes will be on Ben Bernanke as he appears before Congress on Tuesday ...

Treasury’s Paulson Says Goal Is to Back Fannie & Freddie in “Current Form”

Releasing a statement on Friday, U.S. Treasury Secretary Henry Paulson said that the focus was to back Fannie Mae and Freddie Mac "in their current form". Paulson added that the Treasury Department was continuing its dialogue with regulators and firms. Stocks are under pressure as stocks from Fannie Mae and Freddie ...

U.S. Trade Deficit Unexpectedly Shrinks to -$59.8 Billion

The U.S. monthly trade deficit unexpectedly shrank in May to -$59.8 billion, with April's deficit figure downwardly revised to - $60.5 billion from a previously reported -$60.9 billion, the U.S. Census Bureau reported Friday. Read More Now

Friday’s Events: Canadian Employment Report, U.S. & Canadian Trade Data

The Canadian employment report kicks off Friday's events followed by the release of the new housing price index and international securities transactions for May, as U.S. markets prepare for the trade balance, import prices index and the preliminary Michigan sentiment report for July. Read More Now

U.S. Michigan Consumer Sentument Rebounds for First Time Since January

The preliminary consumer sentiment survey from Reuters and the University of Michigan rebounded for the first time since January, reaching a score of 56.6 in July from June's reading of 56.4. The consensus was expecting a further decline to 55.5. According to the report, 90% of respondents said they thought the U.S. ...

Government Considering a Fannie Freddie Takeover

For the third day this week the stocks of Freddie Mac and Fannie Mae took a hammerin' on Wall Street and for the second day major newspapers are speculating on their survival as independent companies. On Friday The New York Times and Barons both reported that the two government sponsored enterprises ...

U.S. Foreclosure Rates Decline in June, Says Realtytrac

According to Realtytrac's most recent survey, foreclosures in the United States are down 3.0% in June compared to the previous month's levels, but up 53% from the previous year. Read More Now

Bernanke Calls for Consolidated Supervision of Banks

Testifying before the House Committee on Financial Service, Federal Reserve Chairman Ben Bernanke called for the consolidated supervision of investment banks and the creation of a tool to liquidate failed financial firms. Read More Now

Thursday’s Events: U.S. Jobless Claims, Fed’s Yellen, ECB’s Trichet

The release of U.S. jobless claims and comments from Fed's Yellen (non- voter) will top the North American data releases. Markets will also be paying attention to comments from European Central Bank President Trichet in the afternoon. Read More Now

U.S. Jobless Claims Fall to 346K in Week Ending July 5

Initial claims for unemployment benefits in the United States fell to 346k in the week ending July 5, following an unrevised 404k in the previous week. Continuing claims rose to 3.202 million for the week ending June 28, the Department of Labor reported Thursday. Read More Now

Paulson Says Firms Should Be Allowed to Fail

Testifying before the House Committee on Financial Services, Treasury Secretary Henry Paulson said financial firms must be allowed to fail. "It is clear that some institutions, if they fail, can have a systemic impact. Looking beyond immediate market challenges, last week I laid out my proposals for creating a resolution ...

Ex-Fed President Says Fannie and Freddie ‘Insolvent’

The U.S. officials may need to bail out the two government-sponsored enterprises responsible for insuring mortgages, a former Federal Reserve president said. William Poole, who stepped down as President of the Federal Reserve Bank of St. Louis three months ago, called Fannie Mae and Freddie Mac "insolvent." Read More Now

Are Freddie and Fannie Insolvent?

Financial news outlet CNBC was reporting early Thursday that Freddie Mac and Fannie Mae, the two corporations around which much of housing recovery has been structured, may be technically insolvent. The claim came from William Poole, former president of the St. Louis Federal Reserve. Poole told Bloomberg News that Congress should ...

Fed Funds Shift Slightly, Still Maintain Rate Hike Likely

Following a recent string of soft data, Fed fund futures traders walked a fine line on Wednesday between preaching long-term patience on the part of the Federal Reserve and anticipating immediate inflationary help. Markets were pricing in an 86.2% chance the Fed will keep the target rate at 2.00% at the ...

Former Fed Official Calls for Abandoning Focus on Core Inflation in Medium-Term

Elevated food prices are caused by increased global demand that shows no signs of letting up, and monetary policy should stop excluding food prices and begin to focus on total, rather than core, inflation, wrote a former official from the Federal Reserve. "With respect to monetary policy, the U.S. Federal Reserve ...

MBA Mortgage Applications Move Higher in Week Ending July 4

Weekly mortgage applications in the United States moved higher in the week ending July 4, according to data released from the Mortgage Bankers' Association (MBA) on Wednesday, which reported a 7.5% week-over-week rise in applications. In the previous week, applications rose by 3.6%... Read More Now

Fed Report on Inflation Prompts Moderation in Interest Rates

Mortgage interest rates dropped slightly during the week ended July 3 according to results of the Primary Mortgage Market Survey released by Freddie Mac. The 30-year fixed-rate mortgage (FRM) eased back from the 6.45 percent with 0.6 point that it had averaged for the week ended July 26 to 6.35 percent ...

IndyMac Faces Bank “Run”

After announcing on Monday that it would shutter its mortgage lending operations but continue business as a retail bank, IndyMac was hit on Tuesday by a potentially fatal blow to that part of its business as well. Bank depositors rushed to withdraw money from the bank... Read More Now

Wednesday’s Events: DOE Crude Oil, Mortgage Applications

U.S. crude oil inventories will top the U.S. economic data releases of the day along with Canadian building permits for June. In Europe, markets will hear commentary from European Central Banker Orodnez, and Australians will hear comments from Governor Stevens. Kicking off the day, at 7 a.m. EDT, the U.S. ...

Inflation Concerns Rise Among U.S. Small Business Owners in June

Inflation has become the number one concern among small business owners, according to the National Federation of Independent Business Index of Small Business Optimism released on Tuesday. Read More Now

Treasury’s Paulson Says Fresh Capital Will Strengthen GSEs

U.S. Treasury Secretary Henry Paulson said he is pleased Freddie Mac and Fannie Mae are committed to raising more capital this spring, calling reform of the government-sponsored enterprises the best way to combat foreclosures. Read More Now

Fed’s Lacker Sees Economic Growth Accelerating in 2009

Richmond Fed President Jeffrey Lacker (non-voter) said economic growth should pick up next year and that withdrawing the fiscal stimulus as growth risks fade makes "eminent sense". Speaking at the National Economics Club of Washington, D.C., Lacker said the inflation outlook has "deteriorated", but that the Fed should still remain ...

Expect Pending Home Sales to Keep Falling, Economists Say

The 4.7% decline in U.S. pending home sales in May shows that the previous month's gain was not a true sign of stabilization, economists said after a release the National Association of Realtors on Tuesday. Patrick Newport, U.S. economist at Global Insight, called the report "disappointing," noting that a lot of ...

U.S. May Wholesale Inventories Just Above Forecasts

U.S. wholesale inventories rose 0.8% month-over-month in May, marginally above expectations for a 0.7% advance, while the previous month's figure was revised to a 1.4% gain from a previously reported 1.3% rise, according to a report released Friday by the Department of Commerce. Read More Now

IndyMac Joins Roster of Banks to Fold its Mortgage “Tent.”

IndyMac has announced that, effective yesterday, it is closing both its wholesale and retail production channel and will no longer accept any new mortgage loan submission or rate locks. It will also reduce its workforce to around 3,200 from the current level of 7,400. The bank will also, apparently, continue ...

U.S. Pending Home Sales Fall 4.7% in May

U.S. pending home sales resumed their decline in May, falling 4.7% in the month after an upwardly revised 7.1% bounce in April, according to the National Association of Realtors. April's rebound was originally reported as a 6.3% gain. The consensus was expecting the PHSI to fall by 2.5% in the month, ...

Bernanke Says Fed May Extend Lending Access to 2009

Federal Reserve Chairman en Bernanke said the Federal Reserve may extend Wall Street's access to lending until 2009. Speaking at the FDIC's forum on mortgage lending in Arlington, Virginia, Bernanke did not speak on economic outlook or monetary policy, but he did say Congress may have to heighten its oversight ...

Battered GSE Stocks Recover Slightly in Early Tuesday Trading

Shares of Freddie Mac and Fannie Mae were looking a little better in early trading on Tuesday after investors fled the two government sponsored entities (GSEs) the previous day over doubts that their underlying capital could make it more difficult for them to buy or guarantee mortgages. That, in turn, ...

Tuesday’s Events.: Bernanke & Lacker Speak, U.S. Pending Home Sales

High-profile speakers will take centre stage on Tuesday. Federal Reserve Chairman Ben Bernanke is set to speak in Arlington, Virginia at the Federal Deposit Insurance Corporation's Mortgage Lending for Low- and Moderate Income Households forum. Richmond Fed President Jeffrey Lacker is also slated to speak to the National Economists Club ...

SEC and Federal Reserve Agree to Improve Information Sharing

The Securities and Exchange Commission and the Federal Reserve agreed on an information-sharing pact on Monday, which aims to better detect potential risks to the financial system. U.S. Treasury Secretary Henry Paulson released a brief statement saying the memorandum "is consistent with the long-term vision of Treasury's Blueprint for a Modernized ...

Fed’s Yellen Says Markets “May Get Worse Before They Get Better”

Federal Reserve Bank of San Francisco President Janet Yellen said Monday market conditions "could get worse before they get better", but that she expects market functioning to "improve markedly" by 2009. Read More Now

The Week Ahead

This week will begin with a number of Federal Reserve speakers and see the release of housing data in both Canada and the U.S. on Wednesday. The relatively quiet week will culminate on Friday with Canada's employment report for June, which is expected to be a key market focus. ...

Economists Divided on Direction of Economy, Inflation

With the second half of the year just beginning, economists are questioning if the worst of the U.S. downturn is already over, or whether uncertainty about rising prices spells more gloom and doom for the economy. While there is pressure for the Fed to combat inflation, the central bank remains constrained ...

Improve Business By Becoming Green Certified

There are dozens of ways of plugging in to what is now the hottest trend going, the movement toward energy efficient and sustainable living. But here are a few that could very profitable. Look into Green Certification This is a growing field and, at present, is unregulated but there are a few ...

American Cities See Record Annual Foreclosure Rate Increases in Q2

Record high foreclosure rates in the second quarter were reported in Los Angeles, Seattle, Miami and New York, according to a report issued by PropertyShark.com. Los Angeles led the four cities with a 282.01% increase in the second quarter compared to last year's Q2. Los Angeles reported a record... ...

U.S. June Nonfarm Payrolls Decline 62k, Unemployment Rate Remains at 5.5%

U.S. nonfarm payrolls declined for the sixth straight month, falling in line with expectations by a total of 62k jobs in June, according to the Bureau of Labor Statistics on Thursday. May's jobs figure was revised to a loss of 62k jobs from an initially reported loss of 49k jobs. The ...

Fed’s Mishkin Says Fed Wants to Contain Inflation Expectations

Speaking at a conference in Israel, Federal Reserve board Governor Frederic Mishkin said he currently sees an "upside risk" to inflation expectations and that the Fed wants to contain those expectations. "U.S. inflation has risen recently, largely because of these sharp increases in global commodity prices. However, thus far, the ...

Central Bank Watch: Market Attention Shifts to ECB - Finally Time to Hike?

After last week's highly-anticipated Federal Reserve rate decision, in which rates were expectedly left on hold, markets have shifted their attention to the upcoming European Central Bank rate decision on Thursday. Read More Now

Mortgage Rates Mark Time Waiting for Federal Action

Mortgage rates continued to set record 2008 levels with long term rates moving up slightly during the week ended June 26, and short term rates increasing modestly but in double digits. Mortgage applications increased 3.6 percent on a seasonally adjusted basis and... Read More Now

Wednesday’s Events: U.S. Employment Data Ahead of Nonfarm Payrolls Thursday

Employment data from the United States and the Department of Energy's weekly inventories report will highlight the North American data on Wednesday as markets prepare for U.S. nonfarm payrolls on Thursday. In the afternoon, markets will also be paying attention to comments from Fed Governor Frederic Mishkin. Read ...

After ADP, Markets Expect Lower Consensus for Nonfarm Payrolls

Economists appear to be unanimous in their calls for increased downside risk to Thursday's BLS nonfarm payrolls report, following a weaker-than-expected ADP private employment report for June. ADP figures showed a decline of 79k jobs in the month against expectations of only a 20k loss following three months of upside ...

Will Lehman Brothers Survive Another Round of Rumors?

Rumors were swirling about another major Wall Street player on Monday as Lehman Brothers Holdings Inc. stock fell 11 percent. The stock reached the lowest level it had seen since 2000 as the Street's second smallest Wall Street firm was the subject of speculation that it was in trouble and, like ...

CIT Group Sells Off its Last Home Related Business Interests

CIT Group announced on Monday that it was selling both its home lending business and its manufactured- housing division. The lending business which has total assets of $9.3 billion as well as servicing operations will go to Lone Star Funds for $1.5 billion. In addition, Lone Star will assume $4.4 billion in ...

U. S. Construction Spending Drops Further in May

According to a report from the U.S. Department of Commerce, construction spending in the United States declined 0.4% month-over-month in May. Residential construction fell by 1.6%, unchanged from April's 1.6 % decrease, while non-residential construction gained 0.3% after rising 0.8 % in the previous month. The report also noted ...

Tuesday Events: U.S. Retail Sales, U.S. Construction Spending, US ISM Index

Today's key economic release will be the ISM manufacturing index for June where economists expect a drop to 48.5 from May's 49.6 reading. Canadian markets will be closed to observe Canada Day. At 7:45 a.m. EDT, ICSC will release its retail sales figures for the week ending June 28. In the ...

MICA Reports Continued Problems for U.S. Homeowners

Nearly 68,000 American homeowners with mortgage insurance fell more than 60 days behind on their loans in May, outnumbering the 40,687 people who cured their situation in the month, according to a release from the Mortgage Insurance Companies of America (MICA) on Monday. This is the 26th month in a row ...

ISM Manufacturing Halts Four Months of Declines, Rebounds to 50.2

The U.S. manufacturing sector halted a four-month trend of deterioration and rebounded into growth mode at 50.2 in June, against expectations of a decline to 48.5, according to the ISM manufacturing survey released on Tuesday morning. Despite the headline advance, prices moved up to the highest level since July 1979, ...

MBA Says Home Construction Loan Delinquency Rate Misleading

Constructions loans for single and multi family projects in the United States are incorrectly included in commercial real estate delinquency reports, according to the Mortgage Bankers Association's most recent Commercial/Multifamily Research DataNote. According to the report, combining commercial real estate loans with construction projects destined for family dwellings greatly inflates the ...