Home buyers and refinancers waiting and hoping for a return of record low rates suffered a setback last week as fixed rates reversed a three-week downward trend.

According to data from Freddie Mac’s Primary Mortgage Market Survey released this morning, the 30-year fixed-rate mortgage (FRM) rose to 5.20 percent with borrowers paying 0.70 points for the week ending July 23.  Last week the average was 5.14 percent with 0.7 point.

The 15-year FRM increased from 4.63 percent to 4.68 percent this week.  Fees and points were unchanged at 0.7 point.

One-year Treasury-indexed adjustable rate mortgages (ARMs) inched up a single basis point to 4.77 percent with fees and points also increasing from 0.5 point to 0.6 point.

Five-year Treasury-indexed hybrid ARMs were the sole exception to the increases, dropping from 4.83 percent to 4.74 percent with fees and points unchanged at 0.7 point.

According to Frank Nothaft, Freddie Mac vice president and chief economist, “Mortgage interest rates were mixed this past week with fixed-rate loans averaging somewhat higher while initial rates on ARMs were flat-to-down slightly.  Federal Reserve Chairman Bernanke, during his July 22 Senate testimony, noted that mortgage rates are lower than they were last fall, in part because of the Federal Reserve's actions, and housing affordability right now is the highest its been in many years.

“Newly released housing indicators contain positive signs that the worst may be behind us. Home prices were down 5.6 percent between May 2008 and May 2009, the smallest 12-month decline since June 2008, based on the Federal Housing Finance Agency’s monthly House Price Index. New construction of one-family homes jumped 14.4 percent in June to an annualized pace of 470,000 units, the most since October 2008, according to the Commerce Department. In addition, the National Association of Home Builders reported that homebuilders' assessments of market conditions in July and for the remainder of this year strengthened to a 10-month high.”

On July 20 Fannie Mae released information on its weekly yields for the period ended July 17. 

Conventional 30-year FRMs had an average yield of 4.96 percent compared to 4.79 percent a week earlier.  Conventional 15-year FRMs also increased, rising from 4.22 percent to 4.31 percent.

Government guaranteed FHA and VA loans were up from 5.51 percent to 5.67 percent.  The one-year ARM rose from 2.99 percent to 3.05 percent.

Fannie Mae yields are quoted net of servicing fees.

va mortgage rates

Data releases this week are light but on Tuesday markets will hear biannual testimony on monetary policy from Ben Bernanke, chairman of the Federal Reserve. Bernanke will speak before the House on Tuesday and repeats his testimony to the Senate on Wednesday, but each day offers a new Q&A. 

Analysts aren’t expecting the chairman’s speech to be groundbreaking, but the Q&A could offer commentary on the central bank’s policy of purchasing treasury notes, plus some elucidation on the Fed’s exit strategy from the massive policy response to the financial crisis.

“Expect a robust defense of Fed policy from Mr. Bernanke, but don’t expect him even to hint that the Fed is thinking about reversing any of its measures,” said Ian Shepherdson, chief US economist from High Frequency Economics.

Investor sentiment is positive, though cautious, after a week that saw markets gain over 7%, a big jump following a two-week slump. The bounce was driven more by earnings than macroeconomic data, and this week could be similar considering the lack of market-shaking data.

Q2 earnings expected this week include: American Express, Boeing, Caterpillar, and Merck & Co. Markets will also see earnings from Amazon, Apple, Coca-Cola, eBay, PepsiCo. and Starbucks.

Key Releases This Week:

Monday:

10:00 ― Leading Indicators is a composite index of ten data points that investors look at to predict turning points in the economy. In April and May the composite ended many months of decline when it shot up 1.1% and 1.2%, respectively, and in June ― the 18th month of recession ― investors look for a 0.5% uptick. All ten indicators are expected to be improving on a month to month basis.

“Further steepening of the yield curve is providing the biggest boost to the forward looking measure, with significant contributions also coming from a surge in housing permits and rising stock prices,” said analysts from IHS Global Insight, who look for a 0.9% gain. “A slight slip in the University of Michigan Consumer Sentiment Index will subtract a negligible amount from the headline reading,” they added.

The research team at BBVA adds: “Even though two of the index’s previous drivers of growth, the S&P 500 and consumer expectations, have dropped in June, the decline in 

initial jobless claims and the rise in manufacturers new orders and building permits will help to offset those components.”

1:30 ― A day ahead of Bernanke’s speech, Atlanta Fed President Dennis Lockhart gives his own speech from Nashville, which markets could look at in anticipation of the Chairman’s comments.

Tuesday:

10:00 ― Ben Bernanke delivers the biannual address on monetary policy to the House. The central bank chairman is likely to reiterate that the economy is sprouting green shoots, but recent Fed speeches have indicated that FOMC officials are cautious about tightening policy, which could reverse positive trends in the economy.

“We expect the tone of his prepared remarks to broadly echo the forecast changes made by the FOMC — cautious optimism, at best,” said economists from Deutsche Bank in a client note. “The 2009 central tendency on real GDP, inflation and unemployment were all lifted, and the Fed is looking for only a modest recovery in growth next year.”   

Wednesday:

10:00 ― No new testimony is expected Ben Bernanke when he speaks before the Senate, but another Q&A session will draw attention to the event.

Thursday:

8:30 ― Most analysts are warning that Jobless Claims are pretty unreliable due to seasonal adjustment factors, but it has still been welcoming that initial filings have been well below 600k for the past two weeks. Analysts look for filings to edge up from 522k to  560k in the week ending July 18.

HFE’s Ian Shepherdson argues notes: “After two very steep drops we expect claims to rebound substantially to about 575k from 522k. The seasonal adjustment has ‘expected’ much bigger auto layoffs during the annual retooling shutdowns, partly because GM and Chrysler laid off thousands of people earlier in the spring as they slid into bankruptcy.” 

Eyes will also focus on the Continuing Claims figure, which saw its biggest one-week nosedive ever in the week ending July 4. That too was probably a result of seasonal factors, but markets will want to see if the trend continues.

9:30 ― Daniel Tarullo, Governor of the Fed, Sheila Bair, chairwoman of the FDIC, and Mary Schapiro, chairwoman of the SEC, testify on regulatory restructuring before the Senate Banking Committee in DC. 

10:00 ― The major real estate release this week is Existing Home Sales, which are expected to inch up to an annual rate 4.850 million sales in June. In May the index gained 2.4% to 4.770 million, with the level of inventory overhang dropping 5 months to 9.6 months.

Foreclosure-related sales continue to play a major role in sales, which puts a mixed spin on the increase in sales, but any drop in inventories in an asset to the economy.

Going against the median forecast, analysts at IHS Global Insight said sales will fall further in June, and into the summer. “Distressed sales and improved affordability won the tug of war in April and May. But over the past seven months, the battle has been a stalemate, as sales have hardly changed. For June, we project a small decline in sales. Going forward, we expect sales to slide further as the unemployment rate rises.”

Friday ― The week ends with an update on Consumer Sentiment. Preliminary results from Reuters & the University of Michigan indicated that sentiment fell substantially in July, but final results could be tamer given that oil prices have come down this month and the stock market rebounded last week. 

Mid-July results had sentiment falling more than 6 points to 64.6. Forecasters are putting the final result up, but only slightly, at 65.0.


IRRRL

Mortgage rates drifted down for the third consecutive week although they remain well above the record lows established this spring.

According to the Primary Mortgage Market Survey conducted by Freddie Mac for the week ended July 16, interest rates for the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent with 0.7 point compared to the previous week's average of 5.20 percent with 0.7 point.


The 15-year FRM dropped six basis points to an average of 4.63 percent.  Fees and points were unchanged at 0.7 point.

Five-year Treasury-indexed hybrid adjustable-rate mortgages were the only product to eke out a slight increase, moving from 4.82 percent with 0.6 point to 4.83 percent with 0.7 point for the week.

One-year Treasury-indexed ARMS averaged 4.75 percent with 0.5 point, down substantially from the week ended July 11 when the rate was 4.82 percent with 0.6 point.

Frank Nothaft, Freddie Mac vice president and chief economist stated, "Average fixed-rate mortgage rates were lower than last week and were down 0.4 percent to 0.5 percent from the levels of early June. For a 30-year fixed-rate mortgage, the rate reduction over the past five weeks translates into a monthly payment saving of $56 on a $200,000 loan.


"The latest economic reports were influenced by recent energy-cost movements. Although higher gasoline prices fueled a 0.7 percent monthly jump in the consumer price index for June, the index was down 1.4 percent from June 2008 and represented the largest 12-month drop since January 1950. In addition, retail sales rose 0.6 percent in June bolstered by automobile sale incentives and higher gasoline prices; the average price for regular gasoline has since fallen 6.1 percent from its recent high set over the week ending June 22, according to the Energy Information Administration. And finally, industrial production fell only 0.4 percent in June, the slowest decline in eight months."

On Monday Fannie Mae released information on its yields for the week ended July 10.

The conventional 30-year FRM dropped from an average of 4.93 percent during the week ended July 3 to 4.79 percent.  The conventional 15-year FRM decreased to 4.22 percent from 4.35 percent.

Government guaranteed 30-year FHA and VA mortgages which had been in 6 percent territory a few weeks ago now average 5.51 percent, down from 5.69 a week earlier.
 
The largest drop for Fannie Mae yields was for the one-year ARM which averaged 2.99 last week compared to 3.27 the week before.

Markets look poised to build on three days of rapid gains which have pulled markets up 6.1% since Monday. Futures are looking up this morning after JP Morgan posted Q2 earnings of 28 cents per share, well above expectations of just 4 cents. A better than expected GDP report from China (+7.9%) doesn’t hurt sentiment either.

Meanwhile, oil is down 1% to $60.90, spot gold is trading $2 lower at $937, and base metals have fallen around 1% across the board.

Earnings remain the focus: The 3-day rally has been helped by earnings from Goldman Sachs and Intel earlier in the week, and after the close today Google will post its results, followed by Bank of America and GE tomorrow. 

Lehman 2.0: Treasury has refused to extend aid to CIT Group, making it likely that the business lender will see the same fate as Lehman Brothers back in September. On Wednesday CIT Group said "there is no appreciable likelihood" it would receive government support. 

FOMC Minutes: Yesterday’s FOMC minutes showed central bank officials were confident that the Fed has the right tools to implement an appropriate exit strategy when the right time comes. More interesting was their discussion of why the Fed was purchasing Treasuries, an activity the bank conceded was not marketed well.

"Announcements of substantial additional purchases could add to perceptions that the federal debt was being monetized,” the minutes read. “While most members did not see large-scale purchases of Treasury securities as likely to be a source of inflation pressures given the weak economic outlook, public concern about monetization could have adverse implications for inflation expectations."  

Key Releases Today:

8:30 ― Last week’s Jobless Claims report saw initial filings break a 22-week trend above the 600k level. Weekly filings fell to 565k for the week ending July 4, and for the week ending July 11 analysts expect to see further reduction to 555k.

Analysts from RDQ warned last week that claims may not be a reliable indicator for the next several weeks, as July is known to be a volatile period for the labor market, and auto shutdowns earlier this year are skewing the data. So even if today’s report is in line with expectations, it doesn’t necessarily confirm that last week’s figure was not a blip.

“Given the auto-related volatility, it continues to be the case that we cannot read much into the claims data for the next few weeks,” said RDQ in a client note this morning.

As for Continuing Claims ― they hit another all-time high in the final week of June at 6.883 million. Analysts expect to see slight moderation for the week ending July 4.

10:00 ― On the heels of the Empire State survey, which improved to indicate stabilization in the New York manufacturing sector, the Philadelphia Fed Survey is expected to report only slight deterioration in the month. The median forecast looks for -5.0 reading in July, but some analysts look for growth in the month.

1 pm ― The Builder Confidence Index from the National Association of Home Builders is expected to edge up a single point to 16, indicating that pessimism is still the norm. Still, things are improving from the January low of 8.

“We are hopeful, tentatively, that the NAHB index will creep a it higher in today’s report,” noted chief US economist Ian Shepherdson from HFE. “The index has already risen far enough to suggest new home sales should rebound to about 400k from their recent trend of about 340k per month, but the further the survey rises the more convinced we will be that the increase in sales will actually happen.”

Since June 10 the S&P 500 has dropped more than 7%, including a 1.9% fall on Friday, which pushed the index below its 200-day average. This week a surge of positive data could cause markets to switch direction, but if news disappoints markets could extend their recent declines.

As of Sunday evening, Dow and S&P 500 futures were pointing north, and WTI crude was up slightly to $59.91 per barrel.

The week begins slowly with no news Monday morning and only the monthly budget in the afternoon, but the week’s highlight, Retail Sales, is posted an hour before the opening bell on Tuesday. Other highlights include PPI and CPI, Industrial Production, and minutes from the latest FOMC statement.

In Real Estate, the major news will be Friday’s Housing Starts report, but don’t get too excited: analysts are expecting construction projects to remain at low levels.



Key Releases this Week:

Monday:

2pm ― Even with three months left in the fiscal year, the Budget Statement for June will push the annual deficit past the $1 trillion mark. Analysts expect the monthly deficit to be $97 billion, a major contrast to the $33 billion surplus in June 2008. In the previous report for May, the deficit created a record for the month with a $189.7 billion deficit, pushing the annual deficit to $991.9 billion.

The report isn’t known to shake markets, but reminders that the annual deficit will be $1.8 trillion can’t have much of a positive effect.

Tuesday:

8:30 ― Retail Sales for June are expected to repeat May’s performance with another 0.5% increase. With auto sales excluded, analysts look for a 0.6% advance.

Analysts at IHS Global Insight say the rise is mostly a reflection of rising gas prices. “June retail sales will jump 0.5%, but virtually all of this gain will be due to surging gasoline prices, as chain store and auto sales declined,” they said in a client note.

Comments from Deutsche Bank analysts are similar. “Recall that the previous report was boosted substantially by surging gasoline sales —ex gas retail sales rose just +0.2% m/m, and most discretionary categories posted declines,” they wrote. “If consumer sentiment is faltering—probably as a result of ongoing labor market losses—then retail activity could fall in response.”

Ellen Zentner, senior economist at BTMU, expects only a 0.3% advance in the month (+0.4% ex-autos), and looking ahead she reminded others that consumption won’t return to its pre-recession levels.

“When sales growth does break back into the black, it will be at a new level that matches the higher savings rate and little use of credit,” she said in a client note. “Saving and paying down debt have become the new mantra for households and it will be reflected in their spending habits for years to come.” 

8:30 ― The Producer Price Index has been volatile in recent months so it’s no surprise that expectations are all over the map this month. The median forecast looks for a 0.8% increase in June prices, with expectations ranging from +0.1% to +1.2%. Last month the PPI saw a 0.2% gain, building on a 0.3% gain in April.

The median forecast for core PPI (minus food & energy) is +0.1%, with forecasts ranging from -0.2% to +0.7%. In May the core PPI fell 0.1%.

Forecasters from IHS Global Insight note that the index is released early this month, “so the June report should capture nearly all of oil's recent run-up but none of the subsequent decline.” The look for the all-items index to advance 1.1% in the month due to a 20% surge in gasoline prices. 

“Although commodity costs have risen, finished goods producers cannot push through price increases with demand so weak,” they added.

10:00 ― All analysts agree that Business Inventories will see their 9th consecutive monthly drop in May. Following a 1.1% dip in April. the consensus looks for a 0.8% decline in May, with forecasts ranging from -0.7% to -1.2%.

Cuts to overhang mean businesses aren’t expecting a rebound in consumption any time soon, but it also helps the economy set up for a V-shaped rebound.

The research department at BBVA adds: “This strong reduction in inventories could actually have a positive effect on the economy because once inventories reach a certain threshold, we could see an uptick in industrial production as companies need to maintain a particular level in order to do business.” 

Wednesday:

8:30 ― After a benign 0.1% increase in the Consumer Price Index for May, analysts look for a 0.7% gain in June, owing to a leap in energy prices. When energy and food prices are excluded in the CPI core, the gain should just be 0.1%.  

With demand still weak around the globe and unemployment high at home, the threat of inflation remains feeble. Yet the Federal Reserve and Treasury haven’t signaled a clear exit strategy, so concerns for future inflation remain.

8:30 ― The Empire State Manufacturing survey is the first regional look released each month. The consensus looks for some improvement from -9.4 to -4.5 in July, indicating overall contraction for the 15th straight month.

9:15 ― Industrial Production shrank 1.1% in May and should fall another 0.7% in June, according to the consensus forecast. Though IP accounts for less than one-fifth of the economy, markets watch this report closely as a leading indicator of where the economy is heading.

“We expect production to drop about 0.5%, with manufacturing down 0.4% and relatively cool weather depressing utility output,” said Ian Shepherdson, chief US economist at HFE, in a client note. “Capacity use should fall to yet another new low of just 68.0%.”

2pm ― The FOMC meeting three weeks ago maintained the status quo so the minutes could be more of the same, but analysts will look for any comments on a potential exit strategy following massive government intervention into financial markets and the economy ― comments that were omitted in the policy statement, disappointing those investors concerned with deflation or hyper-inflation.

Thursday:

8:30 ― Last week’s Jobless Claims saw initial filings break a 22-week trend above the 600k level. Unfortunately, this week’s report may not confirm whether that was merely a blip due to the four-day holiday week, as July is known to be a volatile period for the labor market, and auto shutdowns earlier this year are skewing the data.

10:00 ― On the heels of the Empire State survey, the Philadelphia Fed Survey is also expected to report only slight deterioration in the month. The median forecast looks for -5.0 reading in July, but some analysts look for growth in the month.

Friday:

8:30 ― It’s a truism that the economy won’t recovery until the housing market recovers. Unfortunately, the Housing Starts report is expected to report that construction remains weak ― no surprise given that inventory overhang is already dragging prices down. The annual pace of construction is set to fall moderately to 530k, following a 17.2% rebound in May.

“Even though the decline in new home sales has stabilized, the market has not experienced the same renewed demand as that of existing homes because the price of a new home is not as flexible as that of an existing one,” note analysts at BBVA. “Once prices for existing homes stabilize and the excess inventory is depleted, the market for new homes could pick up again and we will see an increase in housing starts.”  

 

In the media:

Swiss Resisting Calls from US to Give Financial Information

UBS AG and the governments of the U.S. and Switzerland are deep in talks to settle a major tax-evasion case that could require the Swiss bank to reveal some -- but not all -- of the 52,000 or so account-holder names the U.S. has sought, according to people familiar with the matter. ― WSJ

Analysts Believe Goldman Earned $2bn in Q2:

Up and down Wall Street, analysts and traders are buzzing that Goldman, which only recently paid back its government bailout money, will report blowout profits from trading on Tuesday. . . Goldman Sachs is betting on the markets, but the markets are also betting on Goldman: Its share price has soared 68 percent this year, closing at $141.87 on Friday. . . . The stock is still well off its record high of $250.70, reached in 2007. In the first quarter, it posted profits of $1.66 billion. Now, the second quarter looks even better. ― NYT

JP Morgan will announce earnings on Thursday while Bank of America and Citi will announce on Friday.

After 22 weeks, initial claims for unemployment benefits have finally fallen below 600,000. There were 565,000 new filings in the week ending July 4, the lowest weekly number since January and a much softer figure than expectations for 610k claims.


“In all likelihood, the shortened week due to the July 4th Independence Day celebrations likely led many employers to not hand out pink-slips, in addition to the fact that auto layoffs earlier in the year precluded the need for seasonal auto shutdowns that usually fall around this time,” said TD strategist Ian Pollick.


To avoid week-to-week volatility in the numbers, analysts often look to the 4-week average. This week that average slipped 10k to 606,000.

In contrast to that good news, the number of people continuing to receive unemployment benefits soared to 6.883 million, a new record high, in the week ending June 27, which is more than double compared to the reading one year ago.


Such an increase in continuing claims implies companies are failing to create new jobs as they cut expenses to maintain profit margins, this should temper any optimism based on the headline initial claims figures.

Looking ahead, economists at RDQ stressed that volatility in the labor market will be such a factor in the coming weeks that little can be read into any of the numbers for the next three weeks, in particular because of the state of auto manufacturing.

After making little to no ground during the holiday shortened work week,  mortgage backed securities are still in search of clear direction. Last week MBS closed at the same level at which they opened on Monday, even a very poor Employment Situation report was unable to increase demand for  "rate sheet influential" MBS coupons.  To remind readers, as MBS move higher in price, mortgage rates move lower.   Following the release of the employment situation report on Thursday, MBS did manage to gain some ground but eventually gave back early morning gains as market participants made for an early exit ahead of the three day weekend.  Matt and AQ inform me that MBS are battling a very unclear economic picture which is prohibiting prices from moving higher.   The week ahead is very light on economic reports with the highest impacting events to come from Treasury auctions throughout the week.

 

Today we get one piece of data, the Institute of Supply Management(ISM)  non-manufacturing survey which measures the strength of the non-manufacturing sector of our economy.   Readings above 50 indicate growth while readings below 50 indicate contraction.  The last 3 surveys have each come in better than the prior one; however,  last month’s report missed expectations to the low side coming in at 44.0 for May.  Economists surveyed were expecting June’s report to come in at 46.7 but the release has indicated a better than expected reading at 47.0, continuing the trend of improvement within the non manufacturing sector of the economy.   Following the release, there was little reaction from the markets.

 

 

Tuesday

-          The first of three Treasury auctions for the week.  At 1pm the Treasury Department will auction $35 billion 3 year notes.   The added supply of debt on the market will apply pressure on treasury yields to move higher to attract bidders.    For the auction to be viewed as a success, we look for high demand from indirect(foreign) bidders.  The last auctions that took place 2 weeks ago,  saw well above average demand from these accounts.    It will be very difficult for MBS to move higher unless Treasuries can move lower in yield and with more and more supply coming this is becoming more difficult.

Wednesday

-          At 700am, The Mortgage Bankers’ Association Application Index. This data set tracks the increase or decrease in purchase and refinance activity at major lenders.  The recent spike in rates has had a greater impact on the refinance activity but last week’s report showed both  refinance and purchase activity declining.   The purchase activity posted a 4.5% decline while the refinance activity dropped 30 %.

-          The second treasury auction for the  week takes place at 1pm. The Treasury will auction $19billion 10 year notes.    Since the average life of a mortgage is between 5-10 years, this auction is more relevant to MBS than the 3 year auction.   Market participants will be looking at the indirect demand data to gauge the auction’s success.  Strong demand would be positive for MBS and lower mortgage rates.

Thursday

-          Weekly jobless claims which totals the number of Americans that filed for first time unemployment benefits for the prior week.  Last week’s report showed that claims fell 16,000 to 614,000  and expectations call for this week’s report to indicate 610,000 first time claims.   An increasing trend in unemployment claims points to a weak labor market which would lead to less consumer spending.  If you do not have a job, you are much more likely to put off buying any unnecessary items.   So, MBS tend to benefit with a higher than expected reading.  As part of this report we also get continuing claims which totals the number of Americans that continue to file for benefits due to lack of finding employment.  Last week’s report showed a decline of 53,000 to 6.702 million.

-          The last treasury auction for the week will take place at 1pm. The Treasury will auction $11billion 30 year bonds.   When our government does not have the cash to pay for spending, they issue treasury bills, notes and bonds to borrow the money.  A treasury bill has a term of less than 2 years, a treasury note has a term of 2 to 10 years and a treasury bond has a term of greater than 10 years. 

Friday

-          International Trade which measures the difference between what we import into our country and what we export to other countries.  Expectations call for the trade balance to be at $-28.8billion following last month’s $-29.2billion gap.   The biggest impact to MBS from this report is the potential impact of importing inflation.  A smaller trade gap would be a sign of a stronger dollar which makes import prices like the price of oil decline.

-          Import and Export prices which gives a measure on inflation.   The biggest enemy to mortgage rates is inflation as it eats away at the fixed return to the end investor.  Your mortgage is a debt to you, but it is an investment to someone else.  Last month’s report indicated that month over month, export prices increased by 0.6% while import prices increased by 1.3%.   The main driving force behind the increase in import prices has been the run up in oil prices.  Year over year, export prices posted a 6.5% decline while import prices fell a whopping 17.6%.  Any report showing signs of inflation is negative for MBS and can result in higher mortgage rates.

-          The Reuter’s/University of Michigan’s Consumer sentiment index which is a survey of 500 households on their personal financial conditions and attitudes about the economy.  A more optimistic consumer is much more likely to spend while a pessimistic consumer is more likely to save.  Since our economy is driven by consumer spending, the stock market generally rallies with a better than expected reading while MBS generally benefit with a lower reading.  Over the last 4 month’s this report has shown sentiment to be increasing and economists’ surveyed are expecting that trend to continue with a reading of 71.5 following last month’s 70.8.

-          At 10a eastern, Treasury Secretary Tim Geithner will testify before the joint hearing of House Financial Services and Agriculture Committee on derivatives regulation.  Anytime Mr. Geithner speaks, market participants will pay attention as his words can move all markets.