Market Analysis

Stocks are up sharply this morning (the Dow is up nearly 400 points) on a much better than economic reports in the US and on an announcement by the Federal Reserve and central banks of the Eurozone, England, Japan, Switzerland and Canada on a program to lower prices on dollar liquidity swaps through February 1, 2013. An example of a swap is when the Federal Reserve provides U.S. dollars to a foreign central bank in exchange for the equivalent amount of foreign currency from that central bank.  The move is viewed as a backstop to prevent a panic that could result in massive withdrawals of deposits from European banks.  While the move is a coordinated move of all the central banks involved, actual short term loans to banks in Europe under the plan will be made by the European Central Bank, which would be on the hook for any losses resulting from loans that were not paid back. 

In US economic news, ADP reported a 206,000 increase for its November Private Sector employment change report.  This was much better than the 125,000 expected.  The November Chicago Purchasing Manager's Index (PMI) came in at 62.6 vs expectations for a 57.5 reading. 

US Treasury bonds yields moved higher with the 10 Yr US Treasury trading above 2% again at 2.07%.