Treasury yields rose sharply on Wednesday in a sell-off driven by strong economic data and a weak seven-year auction. As expected, trading was light ahead of the Thanksgiving holiday but still decent. The strong economic data was mostly on the consumer front as income and spending posted expectedly nice gains in October and the University of Michigan’s consumer confidence index rose above 70 (still a soft level) for the first time in since June. Most importantly, initial jobless claims plunged nearly 30,000 to 407,000, possibly breaking out of this year’s range.
This morning, there are no economic data releases to drive trading, however early reports of Black Friday retail sales are coming in strong. While the holiday shopping season is not just a one-day affair, the season appears to be off to a strong start as a combination of pent-up demand, higher stock prices, and improving confidence.
Meanwhile, Europe continues to be a source of concern as the contagion that has been feared for many months now appears to be taking hold. Even as the ink has yet to dry on Ireland’s bailout / support package, attention is turning to Portugal and Spain. This morning, there are denials from the EU and Portugal that the nation is being pressured to request financial aid.
Finally, that saber rattling from N. Korea continues, and that is what actually has bond prices slightly improved and stock prices lower.
The bond market will close early today and as is the HSOA rate lock desk. HSOA will be accepting rate locks until 12 noon, PT.
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