The Day Ahead: Durable Goods, New Home Sales, Greece Activates Rescue Package
As European equities climb higher on Friday, the US stock market is looking to open on a positive note following a late rally yesterday.
Dow futures are up 27 points to 11,095 and S&P 500 futures are up 4.25 points to 1,1206. The 2 year Treasury note is -0-01 at 99-29 yielding 1.049% and the 10 year Treasury note is -0-09 at 98-17 yielding 3.803%. The FN 4.5 mortgage-backed security coupon is -0-06 at 100-01.
Commodity prices are slightly weaker with WTI crude oil down 15 cents to $83.55 per barrel, while Spot Gold is trading $1.60 lower at $1,139.90.
Euro stocks were raised after Greek Minister George Papandreou officially asked for the €45 billion rescue package administered by the IMF and European Union to be activated.
Moreover, the German Ifo index of business condition jumped to a higher-than-anticipated 101.6 in April. While in the UK, first-quarter GDP expanded by 0.2% ― less than anticipated, but positive nonetheless.
In addition to key macroeconomic releases for durable goods and new home sales today, market headlines will include news from the G20 meeting in Washington, where financial ministers will discuss financial regulation.
Economists at BMO said widespread agreement on a proposal to implement a global bank tax could weaken financial stocks. They also note that officials might lean on China to revalue its currency.
Key Events Today:
8:30 ― Durable Goods Orders should rise 0.4% in March, compared to the +0.9% gain in February and a 3.8% leap in January. Expectations, however, are all over the map ranging from a strong 2.5% to a 0.8% drawback. Factors bringing the headline down include a decline in aircraft orders from Boeing and weak defense spending. Positive include core capital goods orders ― a proxy for business spending.
“Durable goods orders are expected to rise for the fourth consecutive month in March, pointing to the firming of private demand,” said economists from BBVA. “After contributing negatively in the last two months, motor vehicles and parts orders could have a positive contribution if the surge in auto sales depleted inventories. Furthermore, orders across other components have been strengthening. An increase in orders would point to further improvement in industrial production and non-residential investment in 2Q10.”
10:00 ― New Home Sales fell to a record low in February at 308,000. A fresh record low shouldn’t be in the cards for March though, thanks to tax incentives expiring at the end of April, a recent lift in of mortgage applications, and a two-year high in homebuilder sentiment. The consensus is to see the pace at 330k.
“It is hard to make sense of the recent sharp increase in single-family housing permits—unless new homes are selling,” said economists from IHS Global Insight, prediction a 10% jump in sales. “April's increase in the NAHB/Wells Fargo Housing Market Index implies that business was picking up last month. Based on this, and the latest single-family housing permits numbers (up 5.6% in March), we project that new home sales increased about 10% to a 338,000 rate in March.”