Uneasiness over the growing government debt load and the credit rating for the US is continuing to cast a large shadow over the bond market. This is in conjuction with a prolonged period of overly optomistic economic exuberance enjoyed by stock traders. The Case Schiller Home price index release yesterday indicated that home prices have fallen 18.7% over the last 12 months.
Regarding the consumer confidence data....although 10.2% of the surveyed consumers said they believed their income would increase in upcoming months (8.3% in last read).... only 2.3% of consumers said they were planning to buy a home....down from 2.6% in April. The expected lack of housing demand should have weighed on financial markets....as housing must stabilize if asset deflation is to decelerate and bank balance sheets are to be appropriately mended.
Today we continue to battle debt supply and the continued notion of a more optimistic economic tone. The TSY will auction $35bn 5 yr notes at 1 pm. The stock market is looking to extend it's market gains.