This Week; it will continue to be on what happens in Europe with the debt issues. It is not going to fall off the front page for out markets for many months; on Friday the leaders in Europe are scheduled to meeting on Friday. Markets are hoping there will be some kind of plan that emerges to deal with the debts of Spain and Italy but after two years of trying it is a leap of faith to expect anything substantive coming from the meeting. Not much in the way of key economic readings this week; Monday the Nov ISM services sector index and weekly jobless claims on Friday are the only serious data points.
Technically and fundamentally the US interest rate markets remain in narrow trading ranges; the 10 yr note still unable to hold under 2.00% but does find support anytime the yield climbs to 2.12% as it did last week. Mortgage rates and prices trading a even narrower ranges; the price on the 3.5 FNMA coupon has held in a 50 basis point price range now for almost a month. The week will continue to work off how equity markets, stock indexes higher---bond and mortgage prices lower. We remain skeptical that US interest rates will decline much frm these levels, the larger outlook is that rates will begin to slowly increase from present levels.
TBWS
