Treasuries and mortgages opened a little better this morning after last week that ended with no changes inrates or prices. The E.U. summit last week was another miss, nothing of consequence out of the continual run of meetings that lead to nowhere. Europe’s debts are so huge that there is no solution without a break up of the 13-year experiment that went along OK as long as there wasn’t a problem. Moody’s Investors Service said today it will review the ratings of all European Union nations after last week’s summit failed to produce “decisive policy measures”, while Standard & Poor’s announced December 5th that it may cut 15 euro members, including AAA rated Germany and France. AAA bonds in Europe are a thing of the past. Disappointed with the outcome of the Brussels talks, the yields on 10-Year bonds sold by Italy, that must repay about 53 billion euros in the first quarter of next year, climbed above 6.50% after falling on December 9th. France’s note yield was at 3.29%, from 3.13% a week ago.
By 900am this morning The 10-Year Note yield sat at 2.01% down from 2.06% on Friday; mortgage prices were better at 900am, -6/32 (-.18 bps) after declining 13/32 (.41 bps) Friday. The stock indexes at 900am were weaker. Nothing specific so far this morning, just the usual backing and filling with no real changes. At 930amthe DJIA opened -72, 10-Year Note was +17/32 at 2.01% (-5 bps) and mortgage prices were +5/32 (.15 bps).
The only scheduled data today comes at 200pm when the Treasury reports the November Budget Deficit at $139.5 billion, better than -$150.4 billion in October. This week however has data; Treasury Auctions and the FOMC Meeting. Maybe markets will concentrate on U.S. affairs rather than Europe.
This Week’s Economic Calendar:
11/12/11: 0200pm – November Treasury Budget (-139.5 billion)
11/13/11: 0830am – November Retail Sales (-.06%, excluding auto sales = -0.5%
1000am – October Business Inventories (-0.9%)
0100pm – $32 billion 3-Year Note Auction
0215pm – FOMC Policy Statement
11/14/11: 0700am – Weekly MBA mortgage Applications
0830am – November Import and Export Prices (N/A)
0100pm – $21 billion 10-Year Note Auction
11/15/11: 0830am – Weekly Jobless Claims (-9k to 390k)
- November Produce Price Index (PPI) (+0.1%, excluding food & energy = +0.1%)
- December N.Y. Empire State Manufacturing Index (3.0 from .061)
- Q3 Current Account Deficit (-$110 billion)
0915am – November Industrial Production (+0.2%)
- November Capacity Utilization (77.8% unchanged from October)
1000am – Philadelphia Fed Business Index (4.5 from 3.6)
0100pm – $13 billion 30-Year Bond Auction
11/16/11: 0830am – New Consumer Price Index (+0.1%, excluding food & energy +0.1%)
The 10-Year Note is back to 2.00% this morning,at the lower end of its month-long range; of course to have the 10-Year Note better the stock market must be weaker, and it is this morning. There is no actual movement in the rate markets and it is likely to stay that way with no accomplishments from the E.U. summit meeting last week. The E.U.’s path now is on fiscal controls of all the E.U. members; cutting expenses and increasing revenues (taxes). Getting 27 members of the E.U. and 17 members using the euro currency to agree on budgets isn’t likely to achieve much success, however it is diffucult to imaging getting all of the sovereigns to agree other than on principle. Europe sliding into another recession while Germany and France call the shots.
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