US Economy and Credit Markets Week Ended December 28, 2012
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Treasuries rallied in a shortened holiday week, sending yields lower as the year-end deadline for Fiscal Cliff negotiations loomed and the U.S. faces $600B in automatic spending cuts and tax boosts if a deal is not reached. Christmas Eve fell on Monday and Treasuries were little changed, trading in a tight range on light volume before an early close at 2 p.m. EST, according to Bloomberg. Markets were closed on Tuesday for the Christmas holiday. Treasuries rallied strongly on Wednesday, when Treasury Secretary Timothy Geithner said he would take measures to postpone a U.S. default before a statutory debt limit is reached. Also on Wednesday, the October S&P/CS Composite-20 was reported at 4.3%, ahead of a 4% survey. Treasuries advanced on Thursday as House Majority Leader Harry Reid said the budget stalemate threatened to push the economy into recession and indicated it would not be resolved before the year-end deadline. November New Home Sales also rose 4.4% for the month, ahead of 3.3% expectations. On Friday, November Pending Home Sales increased 1.7% MoM and Treasuries held on to gains for the week as investors sought the safety of government debt with progress lagging in fiscal cliff negotiations. Major economic reports (and related consensus forecasts) for the shortened holiday week next week include: Monday: December Dallas Fed Manf. Activity; Wednesday: December ISM Manufacturing (50.3) and Nov. Construction Spending MoM (.6%); Thursday: Dec. Total Vehicle Sales (15.25M) and Domestic Vehicle Sales (11.68M); Friday: Dec. Change in Nonfarm Payrolls (150K), Dec. Unemployment Rate (7.7%), Nov. Factory orders (.4%).
Posted on Monday, December 31, 2012 @ 9:09 AM

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.