Market Analysis

Bonds have opened slightly weaker despite a regional manufacturing report from NY today coming in weaker than expected. The big news for this week will be the US debt limit.  Today we are expected to hit our debt ceiling of $14.294 trillion.  At this time there does not appear to be a compromise in the works to raise the ceiling.  This issue poses risks for interest rates.  While no one really believes the situation could escalate to the point where creditors truly believe the US would stop making payments on our debt, to the extend that Congress and the White House play a game of chicken on this issue, it could produce pressure on bonds.

This week's economic calendar is fairly light.  Today's May Empire State (NY) Manufacturing Index came in at a reading of  11.9 vs expectations for a reading of 18 and an April reading of 21.7.   Tomorrow we will see April Housing Starts and Building Permits and April Industrial Production and Capacity Utilitization.  On Wednesday the minutes from the last Fed meeting will be released.  On Thursday, we will see April Existing Home Sales, the May Philadelphia Fed regional report, April's Leading Indicators and Initial and Continuing Jobless Claims.  Friday's economic calendar is vacant.