by Calculated Risk on 7/27/2011 02:00:00 PM

Fed's Beige Book:

Reports from the twelve Federal Reserve Districts indicated that economic activity continued to grow; however, the pace has moderated in many Districts. The six Districts nearest the Atlantic seaboard reported a slowdown in activity since the previous Beige Book report; activity was little changed in the Atlanta District and unchanged or slightly improved in the Richmond District. Of the other six Districts, the Minneapolis District reported political and weather-related disruptions that temporarily slowed growth, and the Dallas District slowed to a moderate pace of growth. The remaining four Districts continued to grow modestly.
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Consumer spending increased overall, with modest growth of nonauto retail sales in a majority of Districts. Falling gasoline prices throughout most of this reporting period may have encouraged a pickup in shopping trips and some additional spending since the previous Beige Book.
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Manufacturing activity was reported as continuing to increase since the last report in all but two districts, although many noted that the pace of growth had slowed.
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Labor market conditions remained soft in most Federal Reserve Districts. Employment, especially among temporary hiring agencies, improved in the Richmond District in recent weeks. Modest hiring increases, often within specific sectors such as advertising in the Boston District and manufacturing in the Cleveland District, contributed to modest overall employment gains.

And on real estate:

Residential real estate sales in almost all Districts were little changed from the last Beige Book. Activity edged up in the Richmond, Atlanta, and Minneapolis Districts. ... Increasing inventories of unsold homes in the Boston, New York, and Kansas City Districts have restrained building in the single-family housing sector. ... Since the previous Beige Book, construction and activity in the residential rental market have continued to improve in the New York, Chicago, Dallas, and San Francisco Districts.
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Nonresidential real estate activity improved somewhat in the Boston, Philadelphia, Cleveland, Chicago, St. Louis, and Dallas Districts. The Chicago District reported strong demand for industrial facilities, particularly from the automotive sector. The Philadelphia District reported improvements in terms of lower vacancy rates for office space, industrial space, and apartments; the Chicago District reported generally lower vacancy rates. The New York, Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts all reported generally weak activity in nonresidential real estate.

This was based on data gathered before July 15th, and I've heard reports of further slowing since the middle of the month.

by Calculated Risk on 7/27/2011 11:06:00 AM

It looks like they're going to need a bigger bailout ...

From Reuters: Italian banks fall as Italy/Bund spread widens

The Italian BTP spread over German Bunds expanded by 15 basis points to 305 basis points early on Wednesday. The BTP/Bund yield gap was at around 290 basis points late on Tuesday

Here is a graph of the 10 year spread (Italy to Germany) from Bloomberg. This is probably the key graph to watch right now.

And from CNBC: S&P Expects Second Greek Haircut, New Downgrade

A new and bigger restructuring of Greek debt is likely within the next two years, an official from credit ratings agency Standard & Poor's said on Tuesday, adding a further downgrade of Greece's sovereign debt rating was "pretty certain."

Here are the links for bond yields for several countries (source: Bloomberg):

Greece	2 Year	5 Year	10 Year
Portugal	2 Year	5 Year	10 Year
Ireland	2 Year	5 Year	10 Year
Spain	2 Year	5 Year	10 Year
Italy	2 Year	5 Year	10 Year
Belgium	2 Year	5 Year	10 Year
France	2 Year	5 Year	10 Year
Germany	2 Year	5 Year	10 Year

by Calculated Risk on 7/27/2011 07:47:00 AM

The MBA reports: Mortgage Applications Decrease in Latest MBA Weekly Survey

The Refinance Index decreased 5.5 percent from the previous week. The seasonally adjusted Purchase Index decreased 3.8 percent from one week earlier.
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The average contract interest rate for 30-year fixed-rate mortgages increased to 4.57 percent from 4.54 percent, with points increasing to 1.14 from 0.98 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The following graph shows the MBA Purchase Index and four week moving average since 1990.

Click on graph for larger image in graph gallery.

The four week average of the purchase index is at best moving sideways at about 1997 levels.

Of course this doesn't include the large number of cash buyers ... but this suggests purchase activity remains fairly weak.

by Calculated Risk on 7/27/2011 01:44:00 AM

Not many details, but this story suggests the banks are now fighting with each other.

From the WSJ: Banks Spar Over Loan Settlement

U.S. banks trying to negotiate a settlement over the home-foreclosure mess have hit a new hurdle: They are squabbling over how to split the tab.
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All sides have agreed to a framework that would govern how banks meet their obligations once a deal is reached. Those include principal reductions on certain mortgages, forgiveness of second-lien loans, restitution to borrowers and dealing with foreclosure-related blight.
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Citigroup is pushing to keep its part of any settlement at about $1 billion ... Wells Fargo ... is discussing a range of $4 billion to $5 billion.

It isn't clear what this means - and what will be included as part of the settlement.

On June Home Sales:
• New Home Sales in June at 312,000 Annual Rate
• Existing Home Sales in June: 4.77 million SAAR, 9.5 months of supply
• Home Sales: Distressing Gap
• Graph Galleries: New Home Sales and Existing Home Sales

On House Prices:
• Case Shiller: Home Prices increase in May
• Real House Prices and Price-to-Rent
• Graph Galleries: Home Prices

by Calculated Risk on 7/26/2011 07:20:00 PM

From ATA Trucking: ATA Truck Tonnage Index Jumped 2.8% in June

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.8% in June after decreasing a revised 2.0% in May 2011. May’s drop was slightly less than the 2.3% ATA reported on June 27, 2011. The latest gain put the SA index at 115.8 (2000=100) in June, up from the May level of 112.6 and the highest since January 2011.
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Compared with June 2010, SA tonnage jumped 6.8%, the largest year-over-year gain since January 2011. In May, the tonnage index was 3% above a year earlier.

“Motor carriers told us that freight was strong in June and that played out in the data as well,” ATA Chief Economist Bob Costello said. Tonnage recovered all of the losses in April and May when the index contracted a total of 2.6%.

Click on graph for larger image in graph gallery.

Here is a long term graph that shows ATA's Fore-Hire Truck Tonnage index.

The dashed line is the current level of the index. From ATA:

Trucking serves as a barometer of the U.S. economy, representing 67.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9 billion tons of freight in 2010. Motor carriers collected $563.4 billion, or 81.2% of total revenue earned by all transport modes.

Unfortunately July will probably be weak based on some comments from UPS, from the WSJ:

United Parcel Service Inc., explaining its expectation of flat U.S. package volume in the third quarter, is citing the stalemate over the debt ceiling as a factor.

In a post-earnings conference call with analysts Tuesday, UPS Chief Executive Scott Davis said the economy had become extremely uncertain and that "economic growth expectations have slowed."

He blamed the ongoing political debate over whether to raise the U.S. debt ceiling, among other factors, for contributing to the uncertainty.

"Consumer confidence is down because of it," he said.

He described his outlook on the upcoming peak fall shipping season as "cautious" so far, saying early indications don't show much of a buildup.