Market commentary

This week will be light on economic data but big on euro drama. The main event of the week will be the EU summit beginning on Friday. The expectation is that a cohesive and substantive agreement will be unveiled at this time, although most have lost confidence in the EU leaders’ willingness to deliver on these big agreements. Anything short of this will extend the global market turmoil.

This morning we saw the November ISM non-manufacturing index, which dropped from 52.9 to 52.0. This is weaker than was expected, although it still reflects a growing economy, but a very slow growth economy. The most concerning portion of this report was a substantial, and unexpected, drop in the employment sub-index. The employment measure dropped from 53.3 to 48.9, the second lowest reading since the economy was still emerging from recession back in the Spring of 2010. This is a big divergence from November’s nonfarm payroll service-sector figures.

The overall positive ISM report and hopefulness of this Friday’s EU meeting has stocks in rally mode again. As one would expect, the rally in stocks is pushing bond prices lower. Mortgage pricing is worse by .125% to .25%.