The bond market improved Thursday and U.S. stocks fell sharply as the “euro fear” trade that we have seen for several weeks once again came to the fore. The yield on the 10 year Treasury yield fell to 1.93% intraday but is back up to 2.02% this morning. There were reports yesterday that the European Financial Stability Fund may not backstop Italy, in addition to growing concern about the liquidity in European markets.
Economic data in the U.S. economic data has looked incrementally better this week, including today’s report. The index of U.S. leading indicators rose .09% in October, more than forecast, after posting an increase of 0.1% in September. The Leading Indicators Index (LEI) is an outlook on the U.S. economy for the next 3 to 6 months. Nine of the ten components contributed to October’s increase, led by the increase in building permits, the drop in initial jobless claims and a longer factory workweek.
Partially ignoring the financial and fiscal drama in Europe, U.S. stock markets are trading higher this morning as Treasury prices decline. Prices on mortgages are slightly worse.
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