Residential New Construction Prognosis

U.S. home building likely won't return to normal levels until 2014, and then only if housing prices rebound and foreclosures drop sharply, research from the San Francisco Federal Reserve Bank showed.
Continued weakness in the housing market is dragging on the U.S. economy, which is losing ground under the weight of 9.2 percent unemployment and declining consumer confidence.

Research released by William Hedberg, a San Francisco Fed research associate, and John Krainer, a senior economist there, indicate the drag from housing is likely to continue for years.
"Our analysis suggests that even an unusually strong period of real house price appreciation would not, on its own, lift starts to long-run average levels," the researchers wrote in the regional Fed bank's latest Economic Letter. "A significant easing of the drag on housing stemming from the inventory of foreclosed homes is also needed."
Foreclosures would need to drop by 50,000 homes per quarter starting in 2012, the researchers found, and home prices would need to stop falling by 2013 and then begin to rise, for housing starts to return to pre-2004 levels by 2014.
Such a scenario is optimistic, they said, because the inventory of foreclosed homes is still rising, and the 50,000 unit-per-quarter decrease would match the sharp pace of increase in foreclosures when they began in 2006.
Article from Reuters.com

Market Data: Week Ending July 22, 2011

Market Index	12/31  Close	7/22    Close	Week Change	Simple YTD %
Dow Industrials Avg	11,577.50	12,681.20	1.61%	9.53%
S&P 500	1,257.64	1,345.02	2.19%	6.95%
Fed Funds Rate	0.10%	0.10%	0.00%	0.00%
10 yr T-note Yld	3.29%	2.96%	0.05%	-10.03%
5 yr T-note Yld	2.01%	1.50%	0.06%	-25.37%
5 yr TIPS - 'Real' Yld	-0.06%	-0.63%	0.02%	-950.00%
Implied 5 yr Inflation %	2.07%	2.13%	0.04%	2.90%
2 yr T-note Yld	0.59%	0.39%	0.04%	-33.90%
2-10 Yr Slope	2.70%	2.57%	0.01%	-4.81%
90 day T-bill Yld	0.12%	0.03%	0.02%	-75.00%
Gold ($/oz)	$1,421.40	$1,601.50	$11.40	12.67%
WTI Oil ($/brl)	$91.38	$99.87	$2.63	9.29%
VIX "Worry Index"	17.75	17.52	-2.01	-1.30%
Credit Spreads	12/31  Close	7/22    Close	Week Change	Simple YTD %
Inv Grade Credit Idx	4.78%	4.46%	0.02%	-6.69%
Low Grade Credit Idx	8.32%	7.36%	-0.01%	-11.54%
Markit CDX Inv Grd Idx	85	92	-5.15%	8.24%
Markit CDX Mid Grd Idx	131	156	0.65%	19.08%

Market Data: Week Ending July 15, 2011

Market Index	12/31  Close	7/15    Close	Week Change	Simple YTD %
Dow Industrials Avg	11,577.50	12,479.70	-1.40%	7.79%
S&P 500	1,257.64	1,316.14	-2.06%	4.65%
Fed Funds Rate	0.10%	0.10%	0.00%	0.00%
10 yr T-note Yld	3.29%	2.91%	-0.22%	-11.55%
5 yr T-note Yld	2.01%	1.44%	-0.29%	-28.36%
5 yr TIPS - 'Real' Yld	-0.06%	-0.65%	-0.04%	-983.33%
Implied 5 yr Inflation %	2.07%	2.09%	-0.25%	0.97%
2 yr T-note Yld	0.59%	0.35%	-0.11%	-40.68%
2-10 Yr Slope	2.70%	2.56%	-0.11%	-5.19%
90 day T-bill Yld	0.12%	0.01%	-0.01%	-91.67%
Gold ($/oz)	$1,421.40	$1,590.10	$48.50	11.87%
WTI Oil ($/brl)	$91.38	$97.24	$1.04	6.41%
VIX "Worry Index"	17.75	19.53	3.66	10.03%
Credit Spreads	12/31  Close	7/15    Close	Week Change	Simple YTD %
Inv Grade Credit Idx	4.78%	4.44%	-0.02%	-7.11%
Low Grade Credit Idx	8.32%	7.37%	0.06%	-11.42%
Markit CDX Inv Grd Idx	85	97	6.59%	14.12%
Markit CDX Mid Grd Idx	131	155	2.65%	18.32%

Mutual Fund Flow Summary

Washington, DC, July 13, 2011 - Total estimated inflows to long-term mutual funds were $3.14 billion for the week ended Wednesday, July 6, the Investment Company Institute reported today. Flow estimates are derived from data collected covering more than 95 percent of industry assets and are adjusted to represent industry totals.

Estimated Flows to Long-Term Mutual Funds
Millions of dollars

		6/8/2011	6/15/2011	6/22/2011	6/29/2011	7/6/2011
Total Equity		-5,755	-7,332	-3,993	-2,299	-3,841
	Domestic	-5,464	-6,869	-4,247	-3,050	-4,471
	Foreign	-291	-464	255	751	630
Hybrid		173	342	748	560	572
Total Bond		5,533	2,486	1,871	2,283	6,411
	Taxable	5,234	2,410	1,469	2,113	6,173
	Municipal	298	75	402	170	238
Total		-49	-4,505	-1,374	544	3,143

Equity funds had estimated outflows of $3.84 billion for the week, compared to estimated outflows of $2.30 billion in the previous week. Domestic equity funds had estimated outflows of $4.47 billion, while estimated inflows to foreign equity funds were $630 million.

Hybrid funds, which can invest in stocks and fixed income securities, had estimated inflows of $572 million for the week, compared to estimated inflows of $560 million in the previous week.

Bond funds had estimated inflows of $6.41 billion, compared to estimated inflows of $2.28 billion during the previous week. Taxable bond funds saw estimated inflows of $6.17 billion, while municipal bond funds had estimated inflows of $238 million.

Market Data: Week Ending July 8, 2011

Market Index	12/31  Close	7/08    Close	Week Change	Simple YTD %
Dow Industrials Avg	11,577.50	12,657.20	0.59%	9.33%
S&P 500	1,257.64	1,343.80	0.31%	6.85%
Fed Funds Rate	0.10%	0.10%	0.00%	0.00%
10 yr T-note Yld	3.29%	3.13%	-0.05%	-4.86%
5 yr T-note Yld	2.01%	1.73%	-0.05%	-13.93%
5 yr TIPS - 'Real' Yld	-0.06%	-0.61%	-0.24%	-916.67%
Implied 5 yr Inflation %	2.07%	2.34%	0.19%	13.04%
2 yr T-note Yld	0.59%	0.46%	-0.01%	-22.03%
2-10 Yr Slope	2.70%	2.67%	-0.04%	-1.11%
90 day T-bill Yld	0.12%	0.02%	0.00%	-83.33%
Gold ($/oz)	$1,421.40	$1,541.60	$59.00	8.46%
WTI Oil ($/brl)	$91.38	$96.20	$1.26	5.27%
VIX "Worry Index"	17.75	15.87	0	-10.59%
Credit Spreads	12/31  Close	7/08    Close	Week Change	Simple YTD %
Inv Grade Credit Idx	4.78%	4.46%	-0.11%	-6.69%
Low Grade Credit Idx	8.32%	7.31%	-0.07%	-12.14%
Markit CDX Inv Grd Idx	85	91	-1.09%	7.06%
Markit CDX Mid Grd Idx	131	151	-3.82%	15.27%

Market Data & Graphs: Week Ending July 1, 2011

Market Index	12/31  Close	7/01    Close	Week Change	Simple YTD %
Dow Industrials Avg	11,577.50	12,582.80	5.43%	8.68%
S&P 500	1,257.64	1,339.67	5.61%	6.52%
Fed Funds Rate	0.10%	0.10%	0.00%	0.00%
10 yr T-note Yld	3.29%	3.18%	0.32%	-3.34%
5 yr T-note Yld	2.01%	1.78%	0.41%	-11.44%
5 yr TIPS - 'Real' Yld	-0.06%	-0.37%	0.11%	-516.67%
Implied 5 yr Inflation %	2.07%	2.15%	0.30%	3.86%
2 yr T-note Yld	0.59%	0.47%	0.14%	-20.34%
2-10 Yr Slope	2.70%	2.71%	0.18%	0.37%
90 day T-bill Yld	0.12%	0.02%	0.01%	-83.33%
Gold ($/oz)	$1,421.40	$1,482.60	-$18.30	4.31%
WTI Oil ($/brl)	$91.38	$94.94	$3.78	3.90%
VIX "Worry Index"	17.75	15.87	-5.23	-10.59%
Credit Spreads	12/31  Close	7/01    Close	Week Change	Simple YTD %
Inv Grade Credit Idx	4.78%	4.57%	0.17%	-4.39%
Low Grade Credit Idx	8.32%	7.38%	-0.19%	-11.30%
Markit CDX Inv Grd Idx	85	92	-7.07%	8.24%
Markit CDX Mid Grd Idx	131	157	-1.88%	19.85%