Foreign Markets a Boon for US Fixed Assets

This evening, Greece's credit rating was lowered by Fitch which has sparked a fairly noticeable change in after hours trading (out of equities). This comes almost one year after S&P lowered the sovereign nation's rating to an A-. As a fledgling recovery takes hold across most of the US and Europe, the deterioration of some government balance sheets represents a continuing risk which may help fuel fixed income trades over the coming days. This is somewhat noteworthy because the Fed has pretty much spent their allotment of $300 billion for the direct purchase of government debt instruments and most recent non farm payroll data showed the economy came with 11,000 jobs of moving into positive job creation mode. These two conditions have many fretting that Uncle Sam will have to offer higher yields on the stacks of 10-year notes and 30-year bonds to attract the capital he is after. We may see foreign funds continue to seek a flight to quality "interestingly enough" just in time.

Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis

Mon. Dec. 7, 12:45 p.m. ET
Nothing of importance

Tues. Dec. 8, 1:00 p.m. ET
Treasury auctions
$40 billion of 3-year notes
The participation levels from domestic and foreign investors was on target.

Wed. Dec. 9, 10:00 a.m. ET
Oct. Wholesale Inventories
-0.5% vs. last -0.9%
This old stale data will likely have little, if any direct impact on the trend trajectory of mortgage interest rates today.

Wed. Dec. 9, 1:00 p.m. ET
Treasury auctions
$21 billion of 10-year notes
Based on this evening's activities thanks to Fitch', this offering may find more aggressive than the technical indicators were initially flashing as an increased number of signs that an interest rate bottom may be near. If I am right, we may see a fairly strong rally in fixed equities supporting lower interest rates.

Thurs, Dec. 10,
Most mortgage-backed securities “roll” to January delivery.

Thurs. Dec. 10, 8:30 a.m. ET
Initial jobless claims for the week ended 12/5
Up 3,000
There are few who doubt the labor sector’s recuperation will be excruciatingly slow. The anticipated uptick in last week’s jobless claims will probably be largely shrugged off by mortgage investors resulting in little, if any change to the current level of mortgage
interest rates.

Thurs. Dec. 10, 1:00 p.m. ET
Treasury auctions
$13 billion of 30-year bonds
This is a key indicator. Investors will be watching very closely to see how this offering fares now that the Fed won't be a direct buyer of this debt obligation.

Fri. Dec. 11, 8:30 a.m. ET
Nov. Retail Sales
Ex. auto
+0.6% vs. last +1.4%
+0.4% vs. last +0.2%
Consumer spending is a major driving force behind economic growth and it will be virtually impossible for the recovery to gain traction without it. Report numbers that match or fall below the consensus estimate will tend to support steady to perhaps fractionally lower mortgage rates. The risk is that Nov. Retail Sales prove stronger than expected.

Fri. Dec. 11, 10:00 a.m. ET Oct.
Business Inventories
-0.3% vs. last -0.4%
Nothing worth noting here.