by Calculated Risk on 9/03/2009 04:30:00 PM

Just another mention: the Atlanta Fed puts out an Economic Highlights and Financial Highlights every week. They highlight different data each week ...

The Federal Reserve released the Factors Affecting Reserve Balances today. Total assets increased slightly to $2.119 trillion. This graph from the Atlanta Fed shows the breakdown in the assets (as of yesterday):

Click on graph for larger image in new window.

From the Atlanta Fed:

The size of the Fed’s balance sheet has largely been flat since March, remaining within a range of $2 trillion to $2.2 trillion.

The overall size of the Fed’s balance sheet has been flat during the past few months, and the broad trends remain little changed. That is, the sizeable declines in short-term lending to financials and nonbank credit markets have largely been offset by increases in holdings of Treasury securities, mortgage-backed securities (MBS), and agency debt.

On Friday, the Federal Reserve Board announced a reduction for the two September TAF auctions, lowering both from $100 billion to $75 billion. The Board has cut the amounts available in the TAF auctions three times in $25 billion increments (from the program’s maximum of $150 billion, last available in June).

The second graph shows a breakdown of Fed Treasury purchases by maturity. From the Atlanta Fed:

Decomposing the Fed’s purchases of Treasury securities by maturity shows a heavy focus in the four-to-seven-year and seven-to-10-year sectors, together making up half of all purchases so far.

But the last four Treasury purchases have been focused elsewhere, with the biggest purchases in the shorter end of the yield curve.

The Fed has purchased a total of $276.4 billion of Treasury securities through September 2. Of the $271.8 billion in non-TIPS securities, the Fed has focused on the four-to-seven-year and seven-to-10-year sectors the most, purchasing approximately $65 billion in each (totaling about half of all purchases).

The two-to-three-year and three-to-four-year sectors have also received a fair amount of attention, especially following two large purchases in the last week and a half in each sector. Recently, the Fed purchased $6.1 billion in the two-to-three-year sector on August 24, $2.3 billion in the 17-to-30-year sector on August 26, and $5.6 billion in the three-to-four-year sector on September 1.

The FOMC statement released on Wednesday, August 12, said the Fed is “in the process of buying $300 billion of Treasury securities” by the end of October. This statement was an adjustment from previous statements that stated “up to” $300 billion in purchases would be made “by autumn.”

There is much more in the highlights. Enjoy.

by Calculated Risk on 9/03/2009 02:35:00 PM

From The Oregonian: Portland's hotels face grim prospects (ht Shawn)

[F]or two weeks in November and one week each in December and January, the Hilton's presidential suite -- along with all other rooms in [the original 23-story building] -- will go dark. [The newer Hilton will remain open.]
...
Downtown Portland hotels are also facing stiffer competition after Sage Hospitality Resources of Denver opened two new hotels with more than 500 rooms just as market went into its funk. At one of those hotels, The Nines, Sage's business was off so much that it sought a delay in loan payments to the City of Portland's urban renewal agency.

Marks, the Hilton general manager, said early this week that the hotel routinely shuts entire floors during slow weeks to cut cleaning and energy costs. He projects the Hilton's occupancy could be as low as 30 percent in some winter weeks.

It is routine for hotels to close floors, but unusual to close an entire building (although Hilton has a newer tower across the street).

There are a couple of key points in this story: occupancy has declined, especially business related travel, and there is too much new supply on the market. Lower demand meets higher supply, and the result is lower prices - and hotels cutting costs, closing buildings, and more and more hotels unable to meet their debt payments - and some even unable to make their payroll.

by Calculated Risk on 9/03/2009 12:36:00 PM

Note: Last year Labor Day was a week earlier (Sept 1st in 2008, Sept 7th this year) and the Democratic National Convention was held August 25th to the 28th, both make the year-over-year comparison more difficult this week.

From HotelNewsNow.com: Labor Day, Democratic National Convention hampers US weekly numbers

Overall, the U.S. industry’s occupancy fell 12.4 percent in year-over-year comparisons to end the week at 54.4 percent. Average daily rate dropped 11.0 percent to finish the week at US$94.01. Revenue per available room for the week decreased 22.0 percent to finish at US$51.10.

Click on graph for larger image in new window.

This graph shows the YoY change in the occupancy rate (3 week trailing average).

The three week average is off 8.9% from the same period in 2008.

The average daily rate is down 11%, and RevPAR is off 22% from the same week last year.

Earlier this year business travel was off much more than leisure travel. So it was expected that the summer months would not be as weak as earlier in the year. September - after Labor Day (Sept 7th) - will be the real test for business travel, and for the hotel industry.

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 9/03/2009 10:00:00 AM

The August 2009 Manufacturing ISM report showed expansion, but the non-manufacturing sector was still contracting in August.

From the Institute for Supply Management: August 2009 Non-Manufacturing ISM Report On Business®

Economic activity in the non-manufacturing sector contracted in August, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.

... "The NMI (Non-Manufacturing Index) registered 48.4 percent in August, 2 percentage points higher than the 46.4 percent registered in July, indicating contraction in the non-manufacturing sector for the 11th consecutive month but at a slower rate. The Non-Manufacturing Business Activity Index increased 5.2 percentage points to 51.3 percent. This is the first time this index has reflected growth since September 2008. The New Orders Index increased 1.8 percentage points to 49.9 percent, and the Employment Index increased 2 percentage points to 43.5 percent. The Prices Index increased 21.8 percentage points to 63.1 percent in August, indicating a substantial increase in prices paid from July. According to the NMI, six non-manufacturing industries reported growth in August. Respondents' comments are mixed about business conditions and the overall economy; however, there is an increase in comments indicating that there are signs of improvement going forward."
emphasis added

The service sector was still contracting in August, although contracting at a slightly slower pace than in July.

No recovery yet in the service sector ...

by Calculated Risk on 9/03/2009 08:30:00 AM

The DOL reports weekly unemployment insurance claims decreased to 570,000:

In the week ending Aug. 29, the advance figure for seasonally adjusted initial claims was 570,000, a decrease of 4,000 from the previous week's revised figure of 574,000. The 4-week moving average was 571,250, an increase of 4,000 from the previous week's revised average of 567,250.
...
The advance number for seasonally adjusted insured unemployment during the week ending Aug. 22 was 6,234,000, an increase of 92,000 from the preceding week's revised level of 6,142,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims increased this week by 4,000 to 571,250, and is now 87,500 below the peak in April.

It appears that initial weekly claims have peaked for this cycle. However it seem that weekly claims are stuck at a very high level; weekly claims have been around 570,000 for the last 8 weeks. This indicates continuing weakness in the job market. The four-week average of initial weekly claims will probably have to fall below 400,000 before the total employment stops falling.