Daily Market Commentary for October 26, 2011

Following a Summit Meeting in Brussels, a joint statement by European Union leaders produced no figure for bank recapitalization requirements but said there was broad agreement on requiring a "significantly higher" 9% tier 1 capital ratio.
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The Commerce Department reported orders for long-lasting goods fell in September for the third time over the past four months, mainly because of lower demand for autos and commercial aircraft. Bookings for U.S.-made products designed to last at least three years fell by 0.8% last month and transportation orders slumped 7.5% to account for virtually the entire decline. Demand for autos leveled off after a busy August and Boeing saw fewer orders for commercial jetliners. Excluding transportation, orders climbed 1.7% during September. Demand increased for electrical equipment, computers, heavy machinery, primary metals and fabricated metals. Orders for core capital goods, which is a closely watched rose an even sharper 2.4%. The core capital goods category omits transportation and defense since demand for autos, planes and weapons are uneven and can change sharply from month to month. During Q3, core capital orders rose an average of 0.9% each month. Shipments of core capital-equipment goods, fell 0.9% during September. The government uses core shipments to help calculate quarterly growth rates for the economy. Shipments of overall durable goods fell 0.7% in September while inventories rose 0.1%. Orders in August were unchanged at a 0.1% decline.

Commerce Department reported sales of new single-family U.S. homes rose by 5.7% in September as prices fell to the lowest level in nearly a year. The Department reported new home sales climbed to an annual pace of 313,000 during September, as buyers were attracted by lower mortgage rates and falling home prices - from slightly revised level of 296,000 during August. The median selling price of new homes, fell over 10% year-on-year to $204,400 and 3.1% compared to the previous month marking the lowest level seen since October 2010. The median price has fallen three consecutive months after hitting a nine-month high of $240,200 in June. Total sales of new homes are 0.9% lower compared to a year ago, 2010. During September, only 76,000 new homes were under construction, striking the lowest level ever recorded. The supply of new homes available fell to 6.2 months at the current sales pace from 6.6 months during August which is the lowest level seen in almost a year and a half. In Q3, new home sales averaged 302,000 a month with little changed compared to an average of 291,000 in same period in 2010. During good economic times, the rate of new homes sales is closer to about 1 million annually. The housing market has been depressed since the recession of 2007-2009, with sales at historic lows.


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