The markets gave their opinion on the “grand bargain” from last Friday’s European Union Summit yesterday with stocks dropping and bond prices rising. All of the major European stock markets closed broadly lower, as did the U.S. markets.
This morning we saw a somewhat disappointing report on retail sales for the month of November, which were up 0.2%, while expectations were for an increase 0.6%. Inside the report we saw electronics sales were up 2.1%, but building material sales fell 0.3% and food/beverage sales were down 0.2%. It appears that consumers have shifted to holiday purchases and have shifted away from other categories of spending.
Today is day two of this week’s Treasury auctions with an offering of $21 billion of 10 year notes. Given the turmoil in Europe expectations are for demand to be fairly strong. Wednesday the Treasury will auction $13 billion of 30 year bonds.
The Fed’s final meeting of 2011 is today with an official Statement being released at 11:15 p.m. PT. It is expected the Fed will not change their policy positions at this meeting, with the tone of the economic assessment to be slightly improved.
Mortgages are following Treasuries lower today with pricing worse by .25% to .375%.
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