Market Analysis

The bond market deteriorated today (lower prices, slightly higher yields/rates) on comments by as the stock market moved forward on better than expected October pending home sales report which was up by 3.7% vs expectations of a .3% decline. The October pending home sales figure reflects transactions that will close after the expected expiration (which has not been extended) of the first time home buyer credit. Also, equity investors shrugged off concerns about issues with Dubai’s sovereign fund and moved up to a new 14 month high for the Dow and to near 14 month highs for the S&P 500 and the Nasdaq.

In economic news, the Institute of Supply Management (ISM) manufacturing index for November was 53.6, lower than expectations of 55.0. Construction spending in October was unchanged which was better than expectations for a .4% decline. On a year-over-year comparison, construction spending is down 14.4% compared to 2008. Also, Philadelphia Federal Reserve Bank President Charles Plosser made statements following a speech that indicated he did not believe the Fed should extend its mortgage-backed security mortgage program set to expire in March 2010.