Weekly Preview - Nov. 30, 2009

Last Week; Treasury successfully sold $118B of notes with strong demand even for the seven yr note which is considered somewhat of a bastard term. Most of the economic releases last week continued to impress markets; Oct existing and new home sales were better than forecasts, Q3 GDP wqs revised lower in the advnce revisioin (from +3.5% to +2.9%) but still a little stronger than 2.5% that was anticipated. Weekly jobless claims fell 35K to 466K, the first time in months total weekly claims were below 500K. It was a short week with most taking off Wednesday for the week. While here in the US we celebrated Thanksgiving the rest of the world went about business as usual; but it wasn't without a problem. Thursday Dubai announced it would ask for a moratorium on its outstanding debt, unable to pay for those grandiose ventures like an indoor snow ski resort in the middle of the desert and Dubai World. One more debt mess hitting. The reaction sent global equity markets down and a flight to safety in sovereign debt. Friday when the US re-opened the rate markets saw strong buying pushing yields lower across the curve and in mortgages as well.
 
This Week; starts where we left off on Friday. The Dubai debt crisis is still being assessed as top its ultimate outcome. Fortunately US banks are not too involved, most of Dubai's debt is held in Europe; nevertheless the problem m re-lights concern that debt problems are still out there and could re-surface at anytime. A heavy economic calendar this week with the Nov employment data bringing up the rear on Friday. In the meantime both ISM indexes (manufacturing and services) will hit as well as Nov auto and truck sales. On Wednesday the Fed Beige Book on the status of the economy from the 12 Fed districts. Thursday Treasury will announce the following week's auctions (3s, 10s and 30s). Pres Obama will address the nation on Tuesday evening on his decision to send another 30K troops to Afghanistan. The week will be marked with increased market volatility in both stocks and interest rate markets. Last Friday the 10 yr note and mortgages hit their lowest yields in two months; 30 yr mortgages at 4.75% and the 10 yr note at 3.21%.

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