The MorningSnapshot- 11/28

The MorningSnapshot
November 28, 2012

Yesterday’s Wrap-Up
Although the initial reaction to yesterday’s Greek debt deal was a pop in risk assets, markets were spooked by Washington’s inability to make progress on the so-called fiscal cliff and eventually sold off. The S&P 500 closed down -0.52% to 1398.94, even after Consumer Confidence rose to a four-year high and bookings for non-defense capital goods ex-aircraft jumped +1.7%, the most since May.

Morning Commentary
Sentiment is mostly lower around the globe this morning on stalled U.S. fiscal cliff talks and doubt surrounding the Greece agreement that was announced yesterday which is pushing German bunds down significantly, with 5s to the long-end of the curve down more than -5bps. In Europe, spreads to the bund are moderately to significantly higher. Upon equity markets opening in New York, the Euro Stoxx 50 is down -0.61%, led lower by Spain’s IBEX 35 down -1.1%, while the 10yr German bund is down -7.7bps to 1.362%. The euro is down -0.394% versus the dollar, while Markit Economics’ iTraxx Europe CDS index is up +4.06bps to 127.61bps.

The dollar is strengthening versus its peers while equities are tumbling, with the Dow down -0.42% upon open. Investors are waiting for politicians in Washington to get their act together and come up with a resolution to the fiscal cliff before they leave for the holidays on Dec. 21. If no deal is made by then, $600+B dollars in spending cuts will automatically be triggered on January 2. Treasury yields are tumbling in response, with the 10yr down -3.2bps to 1.605%.

Today’s Economic Data Lineup (EST)
7:00am: MBA Mortgage Applications, Nov. 23
10:00am: New Home Sales, Oct. est. 390k (prior 389k)
10:00am: New Home Sales M/m, Oct. est. 0.3% (prior 5.7%)
11:00am: Fed to purchase $1.75b-$2.25b notes due 2/15/36-11/15/42
1:00pm: U.S. to sell $35b 5Y notes
1:15pm: Fed to purchase $4.25b-$5.25b notes due 11/30/18-11/15/20
2:00pm: Fed’s Beige Book

North America

  • The Fed is said to be weighing whether or not to force foreign banks to comply to tougher capital rules, according to three people with knowledge of the discussions. The Fed may force non-U.S. firms to house all of their businesses within a U.S. holding company, meaning local units would have to meet minimum capital standards regardless of their parents’ resources.
  • SAC Capital, the $14B hedge fund run by Steve Cohen, told clients in a conference call that it received a Wells Notice related to trading by the fund in shares of two drugmakers, according to a person who listened to the call.
  • The U.S. Treasury, under Mr. Obama’s administration, again declined to call China a currency manipulator.


  • German Finance Minister Wolfgang Schaeuble signaled that Greece may need additional help after the country’s most-read newspaper slammed the rescue accord as a “never-ending story” financed by German taxpayers.


  • Thailand kept its policy interest rate unchanged today after an unexpected cut last month, and signaled it may be done easing amid data points that show the economy is improving after last year’s floods. The one-day bond repurchase rate was held at 2.75%, a move predicted by 16 of 19 economists in a Bloomberg News survey.

“The first step in the acquisition of wisdom is silence, the second listening, the third memory, the fourth practice, the fifth teaching others.””
Solomon Ibn Gabriol

Taylor Anderson
Chief Strategist

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