Thursday, December 29, 2011

Euro Lower On Lackluster Italian Auction

The newsflow is relatively light this morning, and surprisingly our markets are higher despite the euro moving lower. The results from an Italian bond auction this morning were okay, but not strong enough to help boost the euro. Yields offered on the bonds were lower than last month's auctions, but still relatively high. 10-year yields in Italy remain above 7.0%.

The weakness in the euro is boosting the dollar and hurting most commodities. Oil prices have fallen back to $98.50, and gold is down again to $1530.

In the U.S., pending home sales for November came in above expectations with an increase of 7.3%. And the Chicago PMI for December was also above expectations at 62.5, in-line with the prior month.

The 10-year yield is fractionally higher to 1.92%; and the VIX is lower by 2% so far near the 23.0 level.

Trading comment: We haven't done a lot on the trading side of things this week. As portfolio managers know well, this is a busy week for us in terms of last minute tax-loss harvesting to offset capital gains, last minute IRA contributions, as well as any year-end rebalancing. So while you hear a lot of stories about trading slowing down, it is anything but slow at our firm. And next week the fireworks will start in earnest again.


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