It’s amazing to think that it’s 2010 but as we know, time waits for no one. The great thing is that this year’s slate is clean and we have the ability to make it what we want. So in that spirit I challenge and encourage all of us to make it great and go realize our dreams.
Getting back to business, November pending home sales plunged 16%, 5 times greater than forecasts. The decline blamed on the expiration of the home buyer’s tax credit prior to the extension by the Obama administration. The manufacturing report on December activity picked up and with the exception of employment in the sector all components pointed to expansion. The December employment data was weaker than thought with non-farm jobs declining 85K. The overall unemployment rate at 10.0% was unchanged from November. An important note and the reason the unemployment rate did not jump is that 661K more of our fellow Americans have simply stopped working. Across the yield curve only the 10 yr note did not see any improvement. Mortgages improved slightly. The week was marked with inter-day volatile swings as investors and traders expect rates to increase but the rate markets were technically oversold and a slight improvement was expected. Rates are unlikely to decline much based on the present sentiment.
This Week is mostly about supply with treasury selling $84B of notes and bonds beginning on Monday and continuing through Thursday. Treasury borrowing has and will continue to increase as the Administration and Congress are spending at unprecedented levels. Most taxpayers money has been used to shore up the big banks and very little to help the common folk. Wednesday, the Fed will release its report on the economy, The Beige Book. Technically and fundamentally the week starts with more pressure on rates, The Treasury auctions should keep prices under pressure through mid-week. If the auctions meet strong demand we can expect some improvement in rates by the end of the week.
