Market Update – January 4, 2010

Goodbye, 2009. Typing “2009” is so much easier than typing “2010”, but such is life. And folks who are better at using words than I am (“than me”?) say 2010 is pronounced “twenty-ten”, not “two-thousand ten”. Speaking of “2’s” and “1’s”, The U.S. Treasury had a record year of debt sales last year, selling more than $2.1 trillion in bonds and notes, a record and more than the amount in the previous two years combined.

Why are rates where they are? The answer is stronger-than-expected economic news. Well, Thursday morning we learned that Jobless Claims unexpectedly fell by 22,000 to 432,000, which is their lowest level in almost a year and a half. Continuing Claims fell by 57,000. So the thinking goes that “if fewer people are filing jobless claims, the employment picture is starting to look a little rosier, which means that the economy must be doing better…” We also had the ISM Index print its highest level in almost 4 years.

This week promises to be a busier week, news-wise, than last. Today we start with an “amuse bouche” of ISM Manufacturing data. Tomorrow we throw in a few Pending Home Sales and Construction Spending numbers, Wednesday ISM Services, Thursday Jobless Claims, and on Friday, for desert, we have all the Unemployment numbers. The odds continue to drop for the Fed keeping their “0-.25% Fed Funds target” past April – it is down into the low 80% range. We start the year here in the US with the 10-yr yield at 3.85% and mortgage prices roughly unchanged from Thursday’s levels.


On todays date: January 4…

1980: President Carter announces U.S. boycott of Moscow Olympics

1970: Beatles last recording session at EMI studios      

1965: Lyndon Baines Johnson’s “Great Society” State of the Union Address

1863: 4 wheeled roller skates patented by James Plimpton of NY    

The last word:

“Follow effective action with quiet reflection. From the quiet reflection will come even more effective action.” – Peter Drucker