This week has little economic data but Treasury will sell $72B in note and bonds in its quarterly refunding on Tuesday through Thursday. The mess in Europe continues to be the dominant influence on US markets; over the weekend Greece politicians agreed to form a new government with Papandreou stepping down. A new government likely won't change much though; Greeks will still be required to accept vey serious cuts in spending that will impact more jobs and higher taxes in order to get more money frm the EU, IMF, EFSF, and ECB. Next up in the euro contagion, Italy; Berlusconi’s majority is unraveling before a key parliamentary vote tomorrow on the 2010 budget report after contagion from Europe’s sovereign debt crisis pushed the country’s borrowing costs to euro-era records. Debt problems in Europe will not go away for a very long time, if ever----without defaults.
About the only economic release this week that will get attention is Thursday's weekly jobless claims currently expected to be up 3K to 400K; claims in the past six weeks have been hovering at 400K to 412K. Monday afternoon Sept consumer credit, a report we monitor closely, but doesn't get a lot of direct attention from traders; in August credit declined $9.5B, Sept is expected up $5.0B.
The 10 yr note and MBSs are both at pivotal levels; both testing their respective 20 and 40 day averages and both RSIs are at neutral levels. The 10 yr continues to struggle at 2.00% unable to move below it but equally unable to increase. Safety movement into US treasuries is keeping US rates from increasing while there is increasing conviction that the economy is improving
TBWS
