On Tap this week (June 22-26)

Dow starts = 8537

TUESDAY = Existing Home Sales at 10am; Existing home sales came in in-line with expectations – which are expectations for a slow and sluggish housing recovery. Sales moved up 2.4% from last month – but lets be honest, more people buy homes in the spring and particularly summer, so that’s just logical and expected. What is more important is the inventory of homes on hand, which needs to decrease. Low demand needs lower supply. A 9 month supply of inventory isn’t bad but when existing homes inventory alone is at 9.6 month level, it shows that even while housing is getting under control, its not exactly jolting upward anytime soon. (PS, rising rates, unfair and improper valuations/assessments, walk-away closings and foreclosures continue to be steady headwinds)

WEDNESDAY = Durable Goods orders at 8:30am; Durable goods came in strongly on the positive side at a 1.8% increase, when a -0.5% decline was the consensus expectation. More importantly, new orders were strong at 1.1% (up from 0.4% last month) and new orders were strong across the board

New Home Sales at 10am; Chalk up another vote for the "slow recovery" mantra. New home sales decreased -0.6% for May. Expectations were for a slight increase. New home sales are down 33% from May 2008 and the median sales price has dropped -3.4% from May 2008.

5 year Note auction at 1pm; The Auction went well from a raising money standpoint. The Bid-to-Cover ratio was a solid 2.58, which means that people want our money so we dont have to pay high yields to make people buy the treasuries (higher yields = less valuable currency and higher mortgage rates, etc). 63% of the auction bids were from foreign investors (another good sign that they want our money considering India, Brazil and China had REDUCED their exposure to US debt in the past 2 months).

Fed mtg announcement/comments at 2:15pm; Fed comments were relatively in-line with comments from last quarter's meeting; they will leave bank lending rates at 0-.25% for the foreseeable future (and prolly through 2009 at least). They also stated they will continue to buy treasuries/mortgages in an attempt to keep rates under control and that inflation was not on the horizon, but that deflation was not expected really either. Interesting note - the Fed has promised to buy about $1.25 trillion of treasuries and mortgages. Estimates show that there will be $2 trillion raised in new debt during the course of this recovery stimulus effort. If additional stimulus is needed or some of the Fed spending is on mortgages and not treasuries (so the total amount of debt needed to be purchased is closer to $3 trillion, then who is going to buy the remaining .75 or 1.25 trillion? That's a gamble to assume/rely on foreign governments to always be there and always buy, esp with comments from the BRIC countries that they'd like to be less dollar-heavy in their accounts. Bill Gross (Pimco stud) thinks the Fed will have to buy more debt - this only serves to weaken the stability and value of the currency and its possible AAA rating.

THURSDAY = revised 1Q GDP at 8:30am; Revised GDP came in at -5.5% (revised from -5.7%). Dont get too excited about this. This is the 3rd time the calculation has been done and its typical/was expected for it to be revised downward each time. This is still a horrible number - but its already priced into the market and shouldnt have trading consequences.

Initial Jobless Claims at 8:30am; Initial jobless claims had seemed to be lessening (if that word can be used in this context) with recent reports coming in closer to 600,000 than 650,000. This week suprised economists and came in at 627,000 claims, due to end of school year layoffs possibly.

7 year note auction at 1pm; These longer term treasury auctions are the ones that had/have people worried and curious. These are the ones that can affect higher rates/mortgage rates if there isn't demand, and when you have to auction off Trillions of dollars, you would think demand could be an issue. Well, not today or this week (earlier with the 5 year treasury auction). Demand was very strong at a 2.82 bid-to-cover ratio. 2 can be solid and over 2 shows increasing strength in demand. Yields on treasuries dropped and the 10 year rate is moved from 3.68% to 3.6%. Add roughly 1.75% and that's what a 30 yr fixed rate mortgage is likely to look like nowadays. (The goal is to get that 30 yr mortgage rate back below 5% to make loans cheaper and encourage home-buying and refis)

FRIDAY = the annoying Consumer Sentiment report at 9:55am