Market Outlook
Tuesday, December 01, 2009
Price Trend: Negative Price Volatility: High
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Current Conditions:
FNMA 4.5 102-14 (-6)
GNMA 4.5 102-20 (-5)
10yr Yield 3.241
Today's Economic Data
ISM Survey 7:00
Construction Spending 7:00
Pending Home Sales 7:00
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Commentary:
Mortgages and Treasuries are down this morning with the former suffering a little more than the latter. The
ISM survey was not consistent with the Chicago PMI that exceeded forecasts yesterday. This did, however,
mark the 4th consecutive month of expansion. Pending Home Sales data was consistent with other housing
data released last week and was clearly impacted by the tax credit expiration (which was extended).
Construction spending was flat in October even and the reported expansion in September was revised to
show contraction. The report was dragged down by commercial construction as homebuilding actually
expanded quite a bit.
The other factor impacting bond prices this morning is the talks regarding how Dubai World will resolve its
debt issues. Treasuries had been benefiting from the speculation that Dubai World would default on $26bln
of debt, but now they are involved in talks to restructure the debt which sapped some of the demand for the
safe haven of Treasuries.
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