This week; interest rates are likely to increase a little after two weeks of improvement mostly on safety moves over the holidays. Nothing out of Europe in that time frame, now that the holidays and New year are behind look for renewed comments out of the region. Europe's financial system woes and debt fears still have not been resolved and likely won't be fro many months. The situation has plagued global markets for months; concerns of bank failure contagion and the potential of dragging the US and other economies back into recession have kept US interest rates low and the equity markets quite volatile. Those factors may be lessening, markets have become less fearful of recession and financial system contagion.
This week is employment week; Friday Dec employment data is expected to show the unemployment at 8.7% up 0.1% frm Nov; non-farm jobs +150K and private job growth at +170K. The stock market will likely set the tone for interest rates, Monday should be an up day for the key indexes with bond and mortgage prices weaker as traders unwind those insurance trades through the holidays. Another reminder; the 10 yr has exhibited difficulty holding below 2.00%; it is more likely rates will increase a little than decline this week.
TBWS
