Market Analysis

Bond markets opened with a slight positive bias and equities are down with the Dow off approx 50 points. This week is very light in terms of economic news at the front of the week but heats up on Thursday and Friday. There are three US Treasury auctions totaling $66 billion on Tues, Wed and Thursday. Investor reaction to these auctions could move the markets. On Thursday, investors are still expecting Initial Jobless Claims for the week ended 1/8/11 to come in over 400,000. Also on Thursday the December Producer Price Index is expected to be relatively in line with November’s figures with the headline figure up .8% for the month and the core rate (excluding food and energy) up .2%. On Friday, December Retail Sales data will be very important. Analysts are expecting retails sales will be up .8% for December, matching November and, excluding the automotive component, up .7% down from up 1.2% in November. Also, on Friday we will see the December Consumer Price Index (expected up .4% vs up .1% in November on the headline figure and up .1% on the core rate, matching November), December Industrial Production (expected up .5% vs up .4% in November) and an initial reading on Consumer Sentiment for January (expected up to 75.5 from 74.5 in November).

Below is a recap of this week’s economic calendar: