Market Analysis

Bonds are weaker this morning on stronger than expected Black Friday sales in the US. ShopperTrak reported a 6.6% increase in sales for Black Friday and the National Retail Federation reported that sales for the four days starting on Thanksgiving were up 16% compared to last year from $45 billion in 2010 to $52.4 billion in 2011. Also contributing to weakness in US bond markets are reports that European leaders may finally be more serious about forging a more comprehensive pact to address the sovereign debt crisis. It is possible that the surprising results last Wednesday of the German bond auction where the Germans were only able to sell $5.2 billion out of $8.1 billion (64%) of 10-yr bonds they were trying raise at a yield of below 2%, and the corresponding increase in German yields to the 2.3% level after having been in the high 1’s, is finally sending the message to European leaders that they are in the same boat and it is time they start rowing together.

The economic calendar is light at the beginning of the week but gets active Wed-Friday. Below is a recap of this week’s economic calendar:

Monday, Nov 28

• October New Home Sales – annualized sales are expected at an annualized pace of 312,000 down slightly from September

Tuesday, Nov 29

• November Consumer Confidence – the index is expected to rise from 39.8 in Oct to 42.5

Wedneday, Nov 30

• November ADP Private Sector Employment Change Report – analysts expect a 125,00 increase compared to 110,000 in October
• November Chicago PMI (Purchasing Manager’s Index) – expected 57.5 reading, down from 58.4 in October
• 3^rd Qtr Revised Productivity and Unit Labor Costs – analysts expect a revision downward from a 3.1% increase to 2.6%. Unit labor costs are expected to be revised to a 2.1% decline from an initial estimate of a 2.4% decline

Thursday, Dec 1

• Initial Jobless Claims for the Week Ended 11/26 – expected 390,000 figure vs 393,000 the prior week
• November Institute of Supply Management (ISM) Manufacturing Index – expected 51.0 reading vs 50.8 in October
• October Construction Spending – expected up .3% vs up .2% in September

Friday, Dec 2

• November Non Farm Payrolls & Unemployment – Payrolls expected up 123,000 vs up 80,000 in October. The Private Sector is expected to have added 141,000 jobs vs 104,000 in October. The Public Sector is expected to have shed 18,000 jobs vs a decline of 24,000 in October.