June 11, 2009 (FinancialWire) (By Philip Holmes) — Relatively good Beige Book data on housing, backed by a brighter forecast from Home Depot (NYSE: HD) could not keep stocks from closing lower, thanks to fears of rising interest rates and crude oil prices dampened the mood.

Investors took in fresh Federal Reserve’s Beige Book data, and almost liked what they saw. Five of 12 Fed districts saw signs of a moderating slump. Manufacturing continued to decline overall, but showed some improvement in several districts. Retail spending, travel and new car purchases showed little improvement, but there was some bright news on the housing front.

Home sales improved in some districts, amid rising vacancy rates. It seems that it will take more than an uptick in demand to soak up available inventory. Hopes were also buoyed by am improved forecast from home improvement retailer Home Depot. The Associated Press reported that the company, which hosted its annual investor meeting on Wednesday, has upped its full-year earnings per share forecast to flat to down 7%. That’s a bit better than the -7% the retailer forecast in February.

While that may be a harbinger of better housing news to come, investors are far from giddy. One thing they don’t want to be seeing now is a rising trend in interest rates, but that is what seems to be happening. The yield on the 10-year Treasury note yields were up sharply, to 3.95%, after a less-than-stellar turnout at a 10-year note auction.

Investors fear that international holders of U.S. debt are becoming concerned about the country’s rising deficits, and possible moves by the Fed that may have the effect of debasing the currency. Those external deficits, and service on existing debt, can only be managed if Treasury auctions are well-attended, and if buyers of U.S. paper are happy to snap up ever more debt at low interest rates. The latest data suggests that these conditions might not be in place, and the result could be sharply higher yields on Treasury paper.

This would have a disastrous effect on, among other things, mortgage rates. Mortgages don’t necessarily have to be pegged to Treasuries to be affected by an uptick in Treasury yields, and rising mortgage rates would likely dampen any uptick in housing sales.

The Investrend Economics Calendar lists Retail Sales for May (8:30 a.m.), Weekly Initial Jobless Claims (8:30 a.m.), Business Inventories for April (10 a.m.), Treasury auctions 30-year bonds (1 p.m.).

The Investrend Events Calendar showcases  AEP, ILNX, NFX, GLP at Argyle Executive Forum Deal Making in the Energy Sector Conference; AMAT, LDK, ESE, ITRI at Deutsche Bank Securities Leveraged Finance & Credit Products Conference; ANAD, VCLK, DGIT, DMND at Craig-Hallum Capital Group LLC Institutional Investor Conference; BLC, TDS, US, TWC at Credit Suisse Group Convergence Conference; BMY, CELG, GILD, MYGN at Goldman Sachs Global Healthcare Conference; CSX, BNI, NSC, UNP at Bank of America and Merrill Lynch Global Transportation Conference; DNDN, ISRG, VRTX, CPHD at Needham & Company Biotechnology & Medical Technology Conference; DOW at UBS Global Basic Materials Conference; LTM, CSCO, APOL, SAI at William Blair & Company Growth Stock Conference; SYMC at Analyst Meeting; SYNA, SYMC at Consumer Electronics Association Line Shows Conference; V, MA at UBS Securities Electronic Payments Summit.

The Investrend Money Index is an indicator of the depth of market direction or indirection. While not always including the same stocks, the NYSE/NASDAQ 50 Most Actives indicate the direction in which the mass of money is flowing. Last session’s trading showed 22 advancers versus 28 decliners. Advancers were led by Jazz Pharmaceuticals, Inc. (NASDAQ: JAZZ) up 209.80%, Satyam Computer Services Ltd (NYSE: SAY) up 35.71%, Lear Corp. (NYSE: LEA) up 29.56%, Evergreen Solar, Inc. (NASDAQ: ESLR) up 29.38%, Level 3 Communications, Inc. (NASDAQ: LVLT) up 17.70%. Decliners followed Sequenom, Inc. (NASDAQ: SQNM) down 22.83%.

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Quote of the Day: “I may not be a first-rate composer, but I am a first-class second-rate composer.” Richard Strauss

Today is: Kamehameha Day in Hawaii, Nursing Assistants Day.

Happy Birthday: Ben Jonson, Richard Strauss, Vince Lombardi, Gene Wilder, Frank Beard, Shia LaBeouf.

Today in History: Captain James Cook ran aground on the Great Barrier Reef in 1770. Continental Congress appointed Thomas Jefferson, John Adams, Benjamin Franklin, Roger Sherman, and Robert R. Livingston to a committee to draft a declaration of independence in 1776. The Limelight Department, one of the world’s first film studios, was officially established in Melbourne, Australia, in 1892. Frank Morris, John Anglin and Clarence Anglin became in 1962 the only prisoners to successfully escape from the prison on Alcatraz Island. After being appointed on May 15, Anna Mae Hays and Elizabeth P. Hoisington officially received their ranks as U.S. Army generals in 1970, becoming the first females to do so. Seattle Slew won the Triple Crown of Thoroughbred Racing in 1977.

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