Last week we saw a veritable cornucopia of data releases - all
pointing toward safe passage to the advent of Tapering by the Fed later this
month. Wednesday’s ADP payroll data showed growth by +45k jobs, more than
expected in November along with a +54k revision upward for October. Thursday
saw initial jobless claims undershoot expectations by -22k and GDP (Q/Q) swell
to a robust 3.6% annualized. Friday completed the trifecta with headline
unemployment dropping to the magical +7.0% and Univ of Michigan confidence
survey rising to +82.5 versus expectations of +76.
Not surprisingly, treasury yields rose for the week by +6 to
+7bps uniformly across the 5 to 10 year part of the curve. This reflects
expectations of a slowdown in purchases of $45bln/month in the Treasury market.
However, mortgages tightened by -7 to -10 bps on the week
from their recent highs for both 15 year and 30 year mortgages. This
reflects a market expectation that the pace of Tapering will be skewed toward
more Treasury than in the mortgage sector. We would advise caution
initially as markets can be quite fickle in charting a new course until
confirmed with “Fed-speak” later this month.
Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com
203-863-1500
@Tradex_Global
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