Thursday, April 8, 2010

Mortgage delinquencies continue rising

February mortgage delinquencies increased in many cities, though I have been unable to track down a national figure.  It is possible that only the negative reports made for interesting news but in the headlines listed, none of the areas discussed had falling delinquencies.  That 17% of Tampa Bay homeowners have not made a payment in 90 days is stunning.  It is hard to see housing prices remaining stable under such circumstances though Tampa Bay will clearly underperform price changes at the national level.  Housing is still very important to the recovery process (as mentioned previously) both because new home construction typically leads economic recovery and bank balance sheets are still full of debt linked to home prices.

The general market trends of a couple of weeks back continue, though commodities are now outperforming with oil making new highs and gold reversing the recent losses.

US Treasury bonds have continued lower, only bouncing yesterday on a well bid 10 year auction.  Treasuries have not responded to renewed Greek troubles and the yield rises are somewhat at odds with the dollar remaining strong.  If America enjoys low yields at the whim of foreign buyers shouldn't yield pressures show up in the currency?  I still tend to think that bonds are a good bet here and that recent weakness is due to impatience of weak longs who are still waiting for proof that the recovery will not be v-shaped.  The most worrying thing about my view is that there seems to be a general consensus that bonds are a good bet here.

On any bond discussion, it is probably worth mentioning Pimco, where Bill Gross made some pretty odd comments a couple of weeks back which may have triggered some selling into this week's auction.  It reminds me an awful lot of what happened last year,  when comments that the US could lose its triple A rating were made about 2 weeks before a 30 year auction which marked the high trade in bond yields for 2009.

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