Starting better again today as short-covering drives rates back down. The 10 yr note hit a high at 3.60%, at 9:00 this morning it was at 3.28%. It took a lot longer than we expected but finally the oversold market is doing what it should given the technical factors. No data today or tomorrow; Wednesday and Thursday do have key reports. Trading this week should be light with not much change, the large institutional investors and mutual funds have closed books for the end of the year and normally don't like to do much until the new year.

 

This week's economic calendar:

          Wednesday;

                8:30 am Q3 final GDP (+2.7% frm +2.5%)

                10:00 am Nov existing home sales (+4.8% to 4.65 mil units annualized)

                              FHFA Oct home price index (N/A)

          Thursday;

               8:30 am weekly jobless claims (+4K to 424K; continuing claims 4.075 mil frm 4.135 mil)

                            Nov personal income and spending (income +0.2%, spending +0.5%: personal consumption index +0.1%)

                            Nov durable goods orders (-1.0%; ex transportation orders +1.0%)

               9:55 am U. of Michigan consumer sentiment index (75.0 frm 74.2)

               10:00 am Nov new home sales (+6.6% to 303K units)

 

The current bounce in prices (lower rates) should not be taken lightly; suggest taking advantage of it and get deals nailed down that were caught in the spike up in rates. The outlook continues to be negative for interest rates; as long as markets are expecting a strong economic improvement in 2011 as they do now, lower rates are not likely. As we see it now, the 10 yr note may decline to 3.17% where it will likely meet resistance; presently the 10 yr is trading at 3.28%. If the 10 does make it to 3.17% mortgage rates will also decline by 10 more basis points. Thin markets over the next two weeks have the potential of becoming choppy and volatile, doesn't take a big trade to move the markets.

 

Looking to next week, Treasury will be back borrowing; Monday 2 yr note, Tuesday 5 yr note and Wednesday 7 yr note.

 

The stock market opened better this morning, the dollar a little better but relatively unchanged.

 

Courtesy www.tbwsratealert.com

 


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