Interest rate markets doing better this morning with markets moving into holiday mode. Thanksgiving week usually is quiet however these times are in themselves very unusual so we won't relax. There are no economic releases scheduled today; all the data this week hits on Tuesday and Wednesday, Thursday markets are closed of course and will close early on Friday ( US markets can't stand a four day weekend).

 

Today Treasury will begin its usual end of the month auctions; this afternoon at 1:00 $35B of 2 yr notes will go up fro bids, tomorrow its $35B of 5 yr notes and Wednesday $29B of 7 yr notes. With the recent increases in interest rates traders are looking for better demand than what we have seen in recent auctions; weak demand if it occurs will not be well received in the rate market trading.

 

Although it is a holiday week, there are a number of key data points to consider. Existing and new home sales, Q2 GDP, and durable goods orders headline the week.

 

This Week' Economic Calendar:

         Monday;

             1 :00 pm $35B 2 yr note auction

        Tuesday;

             8:30 am Q2 preliminary GDP (+2.4% frm +2.0% on the advance report last month)

             10:00 am Oct Existing home sales (-2.5% to 4.42 mil annualized)

             1:00 pm $35B 5 yr note auction

             2:00 pm FOMC meeting minutes from 11/3 meeting

       Wednesday;

             8:30 am Oct personal income and spending (income +0.4%, spending +0.5%)

                          Oct durable goods orders (-0.3%, ex transportation orders (+0.4%)

                          Weekly jobless claims (+2K to 442K; continuing claims 4.280K frm 4.295K)

            9:55 am U. of Michigan consumer sentiment index (69.4 frm 69.3)

           10:00 am Oct new home sales (+1.6% to 312K frm 307K annualized)

            1:00 pm $29B 7 yr note auction

      Thursday; THANKSGIVING

      Friday;

           1:00 early closes

 

Last week with rates running higher daily, the 10 yr note found a little support at 2.96% after running to it three times and unable to break out. Today the 10 yr note at 2.82% down 6 bp so far this morning. Mortgage prices also improving today. The outlook still remains negative for interest rates but as we have noted on more than a few occasions we are not expecting US interest rates to continue to climb much more. IN the long run, yes, rates are likely to escalate, however in the near term expect the bond and mortgage markets to consolidate at or near the present levels. Don't look for rates to decline back to the lows we had two months ago; we believe the lows in rates have already been achieved. This week being a shorten one expect markets to remain bearish but quiet. The FOMC minutes tomorrow will draw heavy attention, the meeting when the Fed officially announced the $600B QE 2 that has not been universally accepted even by current and former Fed officials.

---www.tbwsratealert.com
 


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