Market Analysis

Both stocks and bonds are slightly worse today.  Stocks rebounded sharply yesterday with the Dow moving back over 12,000.  Currently the Dow is at 12,057.  The 10 Yr US Treasury is at 1.96%.   Mortgage-backed securities (MBS), which did not move much when the 10 Yr Treasury improved earlier this month are also not much worse.  The volatility has primarily been in the US Treasury market.

In economic news, Nov existing home sales came in at an annualized pace of 4.42 million vs expectations for a 5.03 million figures.  In Europe, the European Central Bank awarded 489 billion euros ($645B) in 3 yr loans today, the most ever in a single operation and more than economists’ median estimate of 293 billion euros. The ECB said 523 banks asked for the funds, which will be lent at the average of its benchmark interest rate -- currently 1.0% over the period of the loans. The ECB is trying to ensure that banks have access to low cost cash for the medium term so that they can keep lending to companies and households. In addition to the longer-term loans, the ECB has widened the pool of collateral banks can use to secure the funds.