Monday | December 9, 2013
- Swap spreads grinded tighter again as risk was taken off ahead of Friday's employment report. Spreads in the belly and long end of the curve snapped in on Wednesday after a positive ADP Employment Report and promising New Home Sales.
- The key event of the week was the November Employment Report, released Friday morning. The report did not disappoint, even after bullish expectations grew over the course of the week following strong data. The ADP Employment Report came in 45k over expectations of 215k and Weekly Initial Jobless Claims fell below 300k for only the second time since 2007. Treasuries sold off immediately after the headline Nonfarm Payroll number came in above the 185k expectation at 203k. Additionally, the Unemployment rate decreased to a five-year low of 7.0% from 7.3%. Noteworthy was the fact that the labor force participation rate increased slightly while unemployment decllined.
- Other notable economic data on the week included an upward revision of Q3 GDP to +3.6% from 2.8% and a University of Michigan Consumer Confidence print of 82.5 compared to 76.0 last month. Confidence in the economy will be critical this month as increased sentiment on main street willl help boost holiday spending.
- Following last week's positive employment report and improving economic data, consensus expectations for the timing of the Fed's first tapering moved forward. A survey of economists conducted by Bloomberg after Friday's Employment Report indicated that 34% expect a reduction at the Fed's December 18th meeting, up from 17% of those polled a month ago.
- Important economic data this week includes November Retail Sales. While this data point will not include Cyber Monday sales (December 2nd), it serves as the first look at holiday sales.
- The Senate returns from a two-week break on Monday, and it has been reported that Janet Yellen's confirmation vote could take place this week.
The information represented herein was obtained from various sources, which we believe to be reliable. Neither the information presented nor opinions expressed constitutes an offer to buy or sell any security. And it is not intended to guide the investor on which securities to buy, or when to buy or sell.