This Week; the headline remains the same, will the European officials actually come up with a plan the takes Greece and the other back from the edge of the cliff? We believe they will have something but we also believe whatever comes from the meeting now scheduled for Wednesday will be just a bandage that will not end the crisis facing Europe's banks and the countries in the region hanging by their finger nails. There are no economic reports on Monday; the rest of the week has something everyday; Thursday markets will get the first report on Q3 GDP, expectations are the economy grew 2.2% in the quarter compared with +1.3% growth in Q2.
On top of the uncertainty over Europe and the volatility it has generated in US equity markets; Treasury will auction $99B of notes on Tuesday, Wednesday and Thursday. Recent auctions have been a little disappointing with demand not as strong as it had been for months when Treasury borrowed. The bond and mortgage markets will likely stay within a narrow range as has been the pattern for the last two weeks. The technicals remain bearish, however as long as the 10 doesn't close above 2.30% there remains the possibility mortgage rates may fall somewhat from the present levels.
TBWS
