Billerica Condominiums

Light trading in U.S. Treasury securities on Monday during this - historically the slowest month of the year - resulted in yields remaining close to unchanged. Treasuries got off to a rocky start when investors began buying yen-denominated stocks on optimism that the Japanese economy would improve, due in part to support for the Prime Minister's reform plans. The Nikkei closed at a four-year high while the Japanese bond market touched levels not seen in five months. U.S. equity markets also rose at opening, drawing additional funds from Treasuries. But a rise in oil prices stifled the Wall Street rally, as oil again moved above $66 a barrel.

When oil headed back down stocks regained their composure and actually clawed their way back into positive territory just before closing. Oil gained only10 cents on the session to close at $65.45 a barrel, and Treasuries were largely unchanged. Steady yields allowed mortgage lenders who base their rates on yields, which move in the opposite direction of prices, to leave them unchanged.

Stocks Eke Out Gains

Stocks opened in positive territory on Monday, with some analysts chalking up the move to technical buying after a flat session on Friday. The Dow Jones Industrials got an early boost from Intel, which led the Dow and bolstered the chip sector of the Nasdaq. Procter & Gamble also added more than 1 percent thanks to an article in Barron's over the weekend suggesting that its stock was priced at a steep discount. The other 14 Dow components that closed in positive territory showed only moderate to small gains. The 14 components closing down told a similar story. None lost more than 1 percent, and most losses were modest. Walt Disney was the exception, however, tumbling 0.9 percent.

A chip rally, helped by Motorola's one-off quarterly gain, pushed the Nasdaq positive and kept it there for most of the session. The SOX index, which monitors chip activity, added over five points on the day. After closing, however, a trade group said that in July chip equipment makers booked $1.02 billion in orders. This resulted in a book-to-bill ratio of .93. Anything over 100 is regarded as bullish, so this could impact trading on Tuesday.

Intel added 1.6 percent - leading the tech bellwethers - but other gains were small. On the downside, Yahoo! took the biggest hit, falling 2.35 percent - perhaps on word that Google will offer software that will compete with Yahoo! Other losses were slim.

At closing: The Dow 30 Industrial Index rose 10.66 points or 0.10 percent to 10,569.89; the Nasdaq Composite index was up 5.85 points or 0.27 percent at 2,141.41, and the benchmark Standard & Poor's 500 Index climbed 2.02 points or 0.17 percent to close at 1,221.73.

The 30-year Treasury bond was down 6/32 in price with the yield rising to 4.43 percent versus 4.41 percent at Friday's close.

The 10-year Treasury note was down 1/32 in price with the yield rising to 4.21 percent versus 4.20 percent at Friday's close.

The 5-year Treasury note closed even in price with the yield holding at 4.08 percent.

AVERAGE mortgage rates (zero discount points) based on rates collected nationwide were:

The 30-year Conventional Fixed-Rate Mortgage was at 5.652 percent from 5.67 percent at Friday's close.

The 15-year Conventional Fixed-Rate Mortgage was at 5.294 percent from 5.293 percent at Friday's close.

Coming Up

On Tuesday the National Association of Realtors(r) will release Existing Home Sales (EHS) for July. This report is key to the housing industry as existing homes represent about 85 percent of all single-family homes. Analysts are forecasting the sale of EHS to come in at an annual rate of 7.25 million units, which would be down 1.1 percent from the 7.33 million annual rate sold in June. There also are two weekly retail sales surveys due, but these have little impact on the markets. The relative stability in Treasury yields today should influence mortgage lenders to keep rates firm.

Carolyn Siegel

carolyn@interest.com

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