BondSquawk

By Maulik Mody – Bondsquawk.com

September 24, 2010

After a week of poor economic numbers and the FOMC meeting outcome that increased concerns about the economy, demand for U.S. capital goods increased in August signaling that business investment is holding up better than some economists projected. The Commerce Department reported that demand for goods excluding aircrafts and transportation equipment jumped 4.1%, beating expectations of 3.0%. The previous month number was revised upwards from -8.0% to -5.3%. Core capital goods shipments, which closely track business investment in GDP rose 1.6% after a basically flat reading. On 3-month annualized basis core capital goods shipments rose 11.5% through August, down from the 17.4% in Q2 but still robust and consistent with a solid contribution to GDP from continued investment in equipment and software in Q3.

Total orders for durable goods fell more than expected by 1.3%, as a result of a 10% decline in transportation gear orders. Boeing Co reported that it received only 10 orders last month as opposed to 130 orders in July. However, excluding transportation, orders rose by 2.0%, beating expectations of 1% and improved over a downwardly revised fall of 2.8% in June.

New home sales disappointed as fewer than forecast new homes were sold in the U.S. during the last month. Sales data came in flat at an annual rate of 288,000, missing expectations of 295,000. This matches the number for July as being the second lowest level in almost 40 years. High unemployment rate and increasing foreclosures will keep the housing market from gaining momentum. Mortgage applications fell as seen earlier this week and so did the confidence index, showing that the growth is sluggish and with eroded household wealth & poor sentiments, the recovery in this market will be rather slow.

To provide an area wise break-up, housing fell in 2 of four regions. South saw a drop of 11% as sales fell to a record low of 148,000. Midwest saw the highest fall of 26%, while sales surged in the West and the northeast by 54% and 17% respectively. Housing markets were temporarily lifted last year through April this year as a result of the government’s tax credit, but started slowing again after the incentive was removed.

Markets however chose to overlook the poor housing data and rejoiced on improved goods orders as the stock markets reversed their decline. The S&P was improved 2.0% at 1147.32 in afternoon trading. NASDAQ was also 2.0% improved at 2373.68. Treasuries lost ground as the yield on the 10-Yr gained 5 bp to 2.60%. The 30-Yr bond was trading 6 bp higher at 3.79%.

By Rom Badilla, CFA & Maulik Mody – Bondsquawk.com

September 23, 2010

Markets overlooked a bounce in existing home sales as initial jobless claims for the week ended Sep 18 jumped higher. Stocks continued to slide lower and Treasuries inched higher as concerns about the economic recovery grew.

Economic Data

Sales for previously owned homes rebounded in August by increasing 7.6 percent to an annualized pace of 4.13 million homes. The increase, which follows a revised prior period drop of 27.0 percent, was for the most part, in-line with consensus surveys as economists expected an increase of 7.1 percent or a pace of 4.10 million homes. While the jump in sales is encouraging, it is far from what is needed to stop the bleeding of further downward price pressures on housing.

People filing for first time unemployment benefits jumped to 465k people for the week ending September 18. Initial Jobless Claims for the prior week was revised slightly upward by three thousand to 453k.  This week’s reading comes in worse than forecasts as economists expected a claims number of 450k.  This brings the four-week moving average to 463,250 people, a slight tick down from 466,500 in the prior week.

Continuing Claims for the week ending September 11 dropped to 4,489k from a revised prior period weekly reading of 4,537k.  Economists expected Continuing Claims to decline further as surveys were at 4,473k.  However, keep in mind that the drop doe not necessarily mean a pickup in hiring due to the fact that many are exhausting their government benefits as long-term unemployment plagues this economy.  People filling for Extended Benefits increased by 94k from the prior week to 9,498k.  In addition, people under Emergency Unemployment Compensation benefits increased as well to 4,222k, a move higher of just short of 114k from the previous week.

Interest Rates

Yields ended lower throughout the curve as investors sought government bonds. The yield on the benchmark 10-yr note edged a basis point lower to 2.55%. The Long Bond gained as its yield fell 2 bp to 3.73%. The 2-Yr note traded last at a yield of 0.42%, a basis point below yesterday’s close. The belly of the curve fell slightly as the 5-Yr yield edged a basis point lower to 1.31%.

Inflation expectations, as indicated by the yield differential between the 10-yr Treasury note and 10-Yr inflation-indexed bonds (TIPS), narrowed 9 basis points to 1.82%.

Yields continued to slip lower across the Atlantic. The yield on the French 5-Yr bond was 6 bp weaker at 1.66%. 5-yr U.K. Gilts gained to push its yield 3 bp lower to 1.62%.

Among the peripherals, yield on Portugal’s 5-Yr bond gained 16 bp to 4.90%. Ireland’s 5-Yr continued fell as its yield gained 15 bp to 5.45%. Spain’s 5-Yr ended slightly stronger as yields edged a basis point lower to 3.04%. Greece’s 5-Yr bond yield fell by 3 bp to 11.12%.

Across The Capital Markets

Stocks continued to slide lower on poor job numbers. The S&P ended 0.8% weaker at 1124.83. NASDAQ shed 0.3% to 2327.08. The VIX index gained more than 6% to 23.87.

The DXY index , which measures the dollar against six major currencies around the world, gained to 80.118. Euro fell against the dollar to 1.3314. The GBP grew stronger to 1.5684.

Gold spot price scales new highs as it ended the day at another high of 1292.45. Crude spot price rose to 75.18.

By Maulik Mody – Bondsquawk.com

September 23, 2010

Junk bond prices are at their highest level since 2007 as investors seek higher returns in the high yield corporate bond market as Treasury yields drop and investment grade bonds spreads narrow to all time lows. Morgan Stanley and Goldman Sachs seem to be divided on their view of investing in these securities. While the former encourages its clients to park their funds in lowest rated corporate debt, the latter advises to stay away, reported Bloomberg.

The recent rally in high yield bond prices remains unquestionable, as seen in all quality ranges of these securities. The highest quality bonds in this spectrum, rated BBB-/Baa3, rallied from 55 cents to the dollar in December 2008 to 100.4 cents yesterday on an average. That’s an 82.5% price appreciation in less than 2 years. More impressive is the gain in the lowest ranked CCC debt. Average prices rallied to 89.2 cents from 31.6 cents to the dollar in the same period, and their spreads stand at 10.9% above Treasuries. The debate however, is whether these low ranked junk bonds will continue to perform going ahead.

Morgan Stanley forecasts that economic growth will be moderately slow next year, and high yield will hold up well in the sluggish environment. It sees lower rated high yield bonds as cheaper on a risk-adjusted basis. Goldman Sachs, on the other hand, believes that the economy might slow down to 1.5%, causing lower rated junk bonds to falter.

“Lower-quality high yield to us is cheaper on a risk- adjusted valuation than higher-quality high yield,” said Richmond, a credit strategist at Morgan Stanley. “Over the next year or so, the right trade is to be long credit risk and short or neutral on rate risk. The best way to get the most credit exposure with the least rate exposure is in lower-quality high yield.”

While it is hard to have a definitive answer for this question, some comments can be made. Since junk bond prices, both in the BBB and CCC range have come up a long way since 2008, there is a larger potential downside than upside. But at least in the short-term, lower rated high yield might prove as an attractive investment. With Treasuries and high grade bonds offering record low returns and stock markets remaining sluggish and choppy, these securities provide a handsome return for those with a moderate risk appetite. Although the economy has been slowing, corporate earnings have not been adversely affected. The number of US companies having the highest risk of default fell to the lowest level in two years, reported Moody.

Turning the focus to the state of the economy, it is highly likely that neither will the economy bounce back to an above 3.5% by the end of next year, nor will it slow down to below 1.5% during that time. With the Fed promising to keep short term rates near zero levels for an extended period and as concerns about the Fed adding securities to its portfolio threatens long term Treasury rates to fall down further, investors seeking high returns will continue to add high yield bonds to their portfolios. It is only eventual that after bidding up Treasury and high grade prices and even BBB rated high yield prices to above par levels, investors will seek out lower rated junk bonds. The return profile on these bonds may be skewed to the left, but they still have far more upside than its higher rated counterparts, at least in the year to come.

By Rom Badilla, CFA – Bondsquawk.com

September 23, 2010

Sales for previously owned homes rebounded in August by increasing 7.6 percent to an annualized pace of 4.13 million homes. The increase, which follows a revised prior period drop of 27.0 percent, was for the most part, in-line with consensus surveys as economists expected an increase of 7.1 percent or a pace of 4.10 million homes. While the jump in sales is encouraging, it is far from what is needed to stop the bleeding of further downward price pressures on housing. BNP Paribas stated in a morning email to clients the following:

“Nevertheless, the level of resales remained at a very depressed level and apart from the previous month reading is at the lowest level since 1996. The increase in sales in August pushed home inventories down by just 0.6% m/m, while the month-supply measure edged down to 11.6 from12.5 months previously. Apart from the previous month reading, the month’s supply measure was at the highest level since 1983. Excess housing supply, as well as additional supply from foreclosures and looming delinquencies, mean that housing prices will likely remain under pressure and continue trending lower throughout this year and next. Recent readings have already begun to slip after a period of stabilization that coincided with the home tax credit.”

People filing for first time unemployment benefits jumped to 465k people for the week ending September 18. Initial Jobless Claims for the prior week was revised slightly upward by three thousand to 453k.  This week’s reading comes in worse than forecasts as economists expected a claims number of 450k.  This brings the four-week moving average to 463,250 people, a slight tick down from 466,500 in the prior week.

As we have mentioned time and time again, the four week moving average has been hovering between 450k and 500k since last November, which is more in-line with stagnant growth or further job losses based off of previous cycles.  Along those same lines, a moving average of below 400k is more in line with a recovery.

Continuing Claims for the week ending September 11 dropped to 4,489k from a revised prior period weekly reading of 4,537k.  Economists expected Continuing Claims to decline further as surveys were at 4,473k.  However, keep in mind that the drop doe not necessarily mean a pickup in hiring due to the fact that many are exhausting their government benefits as long-term unemployment plagues this economy.  People filling for Extended Benefits increased by 94k from the prior week to 9,498k.  In addition, people under Emergency Unemployment Compensation benefits increased as well to 4,222k, a move higher of just short of 114k from the previous week.

By Maulik Mody – Bondsquawk.com

September 22, 2010

Treasuries in the far end of the spectrum gained and stocks fell as prospects of the Federal Reserve making large-scale bond purchases resurfaced. Reduced mortgage applications indicated a weakening of the housing markets, further boosting the demand for safe assets. Gold continued its rally as it reached a new high, and short-dated Treasuries underperformed as markets await the auction of 2-Yr, 5-Yr and 7-yr auctions next week.

Economic Data

The Mortgage Bankers Association’s index fell 1.4% for the week ended Sep 17, falling for a third consecutive week and reaching a six week low. The index fell as home purchases reduced 3.3% and refinancing fell by 0.9%.

Despite mortgage rates being at record low levels, a high unemployment rate and weak household finances constrain the housing market. The average on a 30-Yr mortgage fell to 4.44% last week, teasing its record low of 4.43% that it touched in the last week of August. The 15-Yr mortgage rate fell to 3.88%, the lowest on record. Refinancing as a percentage of total loans increased to 81.1% from 80.5% the previous week. The comeback in housing will remain slow as the Fed pointed to a “modest” economic recovery partly due to suppressed levels of residential construction.

The Federal Housing Finance Agency’s house price index fell 0.5% in July after an earlier reported fall of 0.3% for June was revised to 1.2%. House prices fell more than economists’ expectations of 0.2% suggesting weak demand and a slow growth in the housing markets. House index regionally fell for but East South Central and New England areas in June. The fall was the most in the Pacific region, as prices slumped 2.1% in June on a monthly basis.

Interest Rates

Treasuries continued to rise for a fourth day, pushing yields lower in the longer end of the curve. The Long Bond gained the most as its yields fell 4 bp to 3.74%. The 10-Yr traded last at a yield of 2.56%, a basis point lower than yesterday. Bonds in the front end of the curve gained as markets speculated on the amount of Treasuries that the government will auction next week. The 2-Yr yield gained 2 bp to 0.43%, bouncing off its record low yesterday. The 5-Yr fell  pushing its yield 2 bp higher to 1.32%.

Inflation expectations, as indicated by the yield differential between the 10-yr Treasury note and 10-Yr inflation-indexed bonds (TIPS), widened 6 basis points to 1.91%.

Yields continued to slip lower across the Atlantic. The yield on the French 5-Yr bond was 8 bp weaker at 1.72%. 5-yr U.K. Gilts gained to push its yield 12 bp lower to 1.65%.

Among the peripherals, yield on Portugal’s 5-Yr bond fell 17 bp to 4.74%. Ireland’s 5-Yr continued to rally as its yield fell 3 bp to 2.26%. Spain’s 5-Yr was stronger as yields pushed 6 bp lower to 3.05%. Greece’s 5-Yr bond yield fell the most, sliding 26 bp to 11.15%.

Across The Capital Markets

Stocks fell for a second day on poor housing numbers and increased concerns about the economy. The S&P ended half a percent weaker at 1134.28. NASDAQ shed 0.3% to 2334.55. The VIX index gained 0.7% to 22.51.

The DXY index ended lower at 79.821. Euro strengthened 1% against the dollar to 1.3395. The GBP gained 0.6% to 1.5623.

Gold spot price climbed toa new high to 1282.15. Crude spot price fell slightly to 74.74.

By Maulik Mody – Bondsquawk.com

September 22, 2010

Stocks drifted lower and Treasuries extended gains after mortgage applications for last week declined. The Mortgage Bankers Association’s index fell 1.4% for the week ended Sep 17, falling for a third consecutive week and reaching a six week low. The index fell as home purchases reduced 3.3% and refinancing fell by 0.9%.

Despite mortgage rates being at record low levels, a high unemployment rate and weak household finances constrain the housing market. The average on a 30-Yr mortgage fell to 4.44% last week, teasing its record low of 4.43% that it touched in the last week of August. The 15-Yr mortgage rate fell to 3.88%, the lowest on record. Refinancing as a percentage of total loans increased to 81.1% from 80.5% the previous week. The comeback in housing will remain slow as the Fed pointed to a “modest” economic recovery partly due to suppressed levels of residential construction.

The Federal Housing Finance Agency’s house price index fell 0.5% in July after an earlier reported fall of 0.3% for June was revised to 1.2%. House prices fell more than economists’ expectations of 0.2% suggesting weak demand and a slow growth in the housing markets. House index regionally fell for but East South Central and New England areas in June. The fall was the most in the Pacific region, as prices slumped 2.1% in June on a monthly basis. The regional break-up for July is yet to come out.

Earlier this week, the NAHB index came in flat at 13, remaining at its lowest level is a year. The Commerce department reported yesterday that permits sought to build single-family houses fell for a fifth consecutive month. The weak housing numbers and a modest growth predicted by the Fed is driving stocks lower. The S&P remained 0.5% weaker at 1133 as of 1:00 PM E.T. and NASDAQ fell 0.9% to 2328. Treasuries continued to attract investors as the 10-Yr lost 5 bp to 2.51%.

By Rom Badilla, CFA & Maulik Mody – Bondsquawk.com

September 21, 2010

Treasuries gained and stocks fell, shedding its gains from yesterday after the Fed said in its meeting today that they are prepared to ease monetary policy in needed, but no action will be taken as of now. The Fed also said that rates will continue to remain in the less than 0.25% range. Gold climbed to a record high and the dollar ended weaker at the end of the day.

Economic Data

Housing starts in the U.S. rebounded in August after collapsing in recent months. The Commerce Department reported that builders began work on an annualized pace of 589,000 homes, which is an increase of 10.5 percent in August. The jump in Housing Starts, which was above market forecasts of 0.7 percent, follows three straight months of flat to negative growth. Much of the growth was concentrated in multifamily housing since starts increased by 32.2 percent. Single-family housing starts improved by a more modest gain of 4.3 percent. On a year over year basis, total Housing Starts is up by 2.2 percent, which is a marked improvement from the last two months. In June and July, Housing Starts declined by 7.5 and 7.8 percent on a year over year basis, respectively.

New home construction was extremely weak in the Northeast part of the country as housing starts declined by 28.0 percent. Conversely, housing starts were robust in both the Midwest and West regions as new construction increased by 21.7 and 34.3 percent. In a similar fashion with the total number, the South increased by 7.0 percent after muddling around in negative territory for the past three months.

Building Permits, which can be interpreted as a leading indicator for Housing Starts, increased by 1.8 percent or at an annualized pace of 569,000 applications in August. The increase, which follows July’s pace of 559,000, surpassed market expectations as forecasters expected an increase of just 0.2 percent. Despite the latest round of improvement, Building Permits on a year over year basis is down 6.7 percent, which suggests that this economy has a lot of wood to chop before signaling the end of this latest downturn in the housing market.

For more on today’s economic data, click here.

Interest Rates

Investors parked their funds on safe government bonds after the Fed said that the economic recovery remained slow and inflation low. Yields pushed down across the curve as a result, more at the far end of the spectrum. The yield on the 2-yr fell to a record low of 0.41%, 5 bp lower than yesterday.  The bond had reached its previous low of 0.46% last month, and after falling in price last week, the bond gained today pushing yields lower. The yield on the 5-Yr slumped 11 bp to 1.30%, lowering the belly of the curve. The benchmark 10-yr bond rallied pushing yields 13 bp lower to 2.57%. The yield on the 30-Yr shed 10 bp to 3.78%.

Inflation expectations, as indicated by the yield differential between the 10-yr Treasury note and 10-Yr inflation-indexed bonds (TIPS), widened 6basis point to 1.85%.

Sovereign yields fell  across the Atlantic as investors shed risky assets for relatively safer government issues. Germany’s 5-Yr bond yields fell 3 bp to 1.45%. Yields on the 5-Yr U.K Gilts slid 4 bp to 1.77%. The yield on the French 5-yr bond ended 3 bp weaker at 1.80%.

Among the peripherals, Ireland’s 5-yr bond rallied, reversing its losses since a week. The yield on the bonds fell 18 bp to 5.29%. Yield on the Greece 5-Yr bond fell 27 bp to 11.39%. Portugal’s 5-Yr bond yields were 8 bp lower at 4.91%. Spain’s 5-Yr bonds gained pushing yields 2 bp lower to 3.11%.

Credit Markets

Corporate bonds rallied as seen in the iTB Indices. The shorter bond climbed to 1088.43, as the average yield fell 9 bp to 2.38%. Bonds in this index outperformed Treasuries as yields tightened by a basis point to 1.66%.

The rally was led by BP’s 5.25% issue due 2013, which 60 cents to 107.20. The yield on the bond fell 20 bp to 2.83, narrowing its spread by 12 bp to 2.13.

The longer index improved 0.5% to 1149.98, ending within spitting distance of the 1150 mark. The average yield weakened 11 bp to fall below the 4.0% mark to 3.95%. Spreads remained flat 1.64% as the index performed at par with Treasuries.

The best performer in the far end of the spectrum was ArcelorMittal’s 9.85% issue due 2019. The yield on the bond fell 17 bp pushing its price $1.34 higher to 127.52. The extra yield demanded by investors to hold the bond over a Treasury with comparable maturity fell 6 bp to 3.54%.

Across The Capital Markets

Stocks ended their green streak as most indices fell in afternoon trading, closing slightly below yesterday’s close. The S&P ended 0.3% weaker at 1139.78. NASDAQ followed suit to call it a day at 2349.25. The VIX volatility index gained 4% to 22.35.

The DXY index ended lower at 80.296. Euro strengthened 1.5% against the dollar to 1.3264. The GBP gained 0.6% to 1.5623.

Gold spot price closed at an all-time high to 1278.15. Crude spot price fell 1.8% to 74.69.

By Maulik Mody – Bondsquawk.com

September 21, 2010

In a statement that did not come as a surprise, the Fed in its FOMC meeting today said that it is willing to ease monetary policy further if needed, but denied adding securities to its portfolio as of now.  It said however that it will continue to reinvest principal payments from its securities holdings.

The Fed expressed their concerns about the low inflation rates, but did not indicate that the economy was heading towards a deflationary environment.  Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate”, the statement said.

The Committee maintained that it will keep target rates between 0 – 0.25% and said it will continue to monitor economic factors such as resource utilization, inflation trends and expectations. Voting against the policy for a record sixth time in a row was Kansas City Fed President Thomas Hoenig. According to the statement, he believed “continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and will lead to future imbalances that undermine stable long-run growth.”

Bernanke expressed concerns that resuming large scale asset repurchases had the risk that public confidence can erode on the Fed’s ability to reduce its balance sheet on time and prevent a rise inflation when needed. Another risk involved in large-scale purchasing is the panic it can create among investors who might interpret the Fed’s actions as an indication that the economy might fall back into recession, which might have triggered this action by the Fed.

After Bernanke’s speech in August, data including retail sales, manufacturing and employment improved, easing fears that the economy might slip back into recession. The Fed said today that although the economy is growing, it is growing at a very slow pace. Consumer spending remains constrained by high unemployment, little income growth and tight credit.

After today’s speech, stocks rallied as the S&P touched 1148 before falling back to the day’s opening levels. Treasuries continue to rise as the 10-Yr yield slid 11bp to 2.60%. the Long Bond rallied pushing its yield 8 bp lower to 3.79%.

The statement released by the Fed can be found here.

By Rom Badilla, CFA – Bondsquawk.com

September 21, 2010

Housing starts in the U.S. rebounded in August after collapsing in recent months. The Commerce Department reported that builders began work on an annualized pace of 589,000 homes, which is an increase of 10.5 percent in August. The jump in Housing Starts, which was above market forecasts of 0.7 percent, follows three straight months of flat to negative growth. Much of the growth was concentrated in multifamily housing since starts increased by 32.2 percent. Single-family housing starts improved by a more modest gain of 4.3 percent. On a year over year basis, total Housing Starts is up by 2.2 percent, which is a marked improvement from the last two months. In June and July, Housing Starts declined by 7.5 and 7.8 percent on a year over year basis, respectively.

New home construction was extremely weak in the Northeast part of the country as housing starts declined by 28.0 percent. Conversely, housing starts were robust in both the Midwest and West regions as new construction increased by 21.7 and 34.3 percent. In a similar fashion with the total number, the South increased by 7.0 percent after muddling around in negative territory for the past three months.

Building Permits, which can be interpreted as a leading indicator for Housing Starts, increased by 1.8 percent or at an annualized pace of 569,000 applications in August. The increase, which follows July’s pace of 559,000, surpassed market expectations as forecasters expected an increase of just 0.2 percent. Despite the latest round of improvement, Building Permits on a year over year basis is down 6.7 percent, which suggests that this economy has a lot of wood to chop before signaling the end of this latest downturn in the housing market.

Along those lines, BNP Paribas’ economics team pointed out in a morning email to clients that the housing market is still on at risk by stating that, “Prospective Buyers Traffic, the leading indicator of future homebuyers’ demand dropped to 9 from 10 previously, back to the March 2009 level, suggesting downside risks to construction activity in coming months.”

Market reaction is rather subdued following the report since all eyes are on today’s FOMC rate decision as market participants look for guidance on the next course of action by the Fed in tackling this recent economic slowdown of low growth and high unemployment. The yield on the 2-Year is now at its all-time low of 0.44 percent while the 10-Year is currently trading at 2.66 percent, down 4 basis points from yesterday.  In similar fashion of reflecting the reality of subdued and anemic growth for the U.S. economy, the dollar is lower. Today, the dollar is down by 0.4 percent while for the month, the dollar is lower by 2.6 percent.  Conversely, kool-aid and optimism that the worst is behind us remain the predominant theme in equities. For the month, the S&P 500 is higher by 8.6 percent.

September 21, 2010

Corporate bonds gained yesterday as the short index and the long index advanced 0.1% and 0.3% respectively. The short index, which tracks bonds maturing in less than 5 years from now, climbed to 1085.42, pushing average yield 4 bp lower to 2.47%. Spreads continued to narrow as it now stands at 1.67%, 2 bp tighter than last week’s close.

The long index jumped to 1141.22, with average yield 3 b lower at 4.06%. The spread of the long iTB index, which is created to track twenty of the most liquid corporate bonds from various industries, widened a basis point to 1.64%.

The outperformer was Berkshire Hathways 3.2% issue maturing in 2015. The bond advanced 78 cents to $105.34. The yield on the bond fell 18 bp to 1.93%, while spreads tightened 15 bp to 0.69%. The bond returned 0.75% on price basis in a day. Following a close second was Transocean’s 5.25% issue due in 2013. Its spread tightened 11 bp to 2.56% as it gained 28 cents in price.