ASEAN KEY DESTINATIONS
Re-cap of the US Markets for the Week ended 18 November 2011
By Paul A. Ebeling, Jnr.
Investors are trying to gauge how much of an impact the European crisis may have on the US economy, nevertheless, economic data for the United States is showing continued improvement.
A measure of future US economic activity rose more than expected in October, according to the Conference Board.
US Stocks: Wall Street posted its worst week for stocks in 2 months, investors are on the sidelines, as the market chopped around without direction Friday, The DJIA and S&P 500 were little changed and the NAS composite index declined a bit.
On the Day:
In the United States, there are doubts a congressional bipartisan committee, The Super Committee's" ability to come up with budget cuts and tax increases that the Congress can agree on next week.
Financial shares, recently among the most sensitive to EuroZone financial strains, rose Friday.
The S&P financial index finished + 0.5%. Morgan Stanley (NYSE:MS) shares edged up 0.6% to 14.21 but fell more than 13 on the week.
The Big Q is if the European Central Bank (ECB) will find a way to act as a lender of last resort in the manner of the US Federal Reserve. Speculation has grown the ECB could lend money to the International Monetary Fund to bail out some EuroZone members.
It is hard to imagine the ECB changing its role in here, but the political powerful's' to be have to be keenly aware of the consequences if this 2 yr old problem gets out of control to a level that it causes serious harm to the markets.
Volume and Breadth: the market saw light trade on Friday with 6.7-B/shrs traded on the NYSE, AMEX and NAS Friday, below the current daily average of 8-B/shrs. Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 13 to 10, and on the NAS decliners beat advancers 1,259 to 1,226.
The CRB Commodity Index was up solidly this morning, but faded with energy prices to end the day with a 0.7% loss.
The precious metals: Gold prices spent the session holding on to a slight gain, finishing at 1724.50 oz for a 0.2% gainer.
Silver was more impressive in its performance. Prices advanced 2.9% to 32.47 oz.
US Treasuries ended the day on a down tone, but managed to hold onto solid gains for the week as renewed turmoil in Europe sparked a flight to safety. The big winner for the week was the 30-yr T- Bond as it saw its yield drop about 20 bps from its peak level Monday.
A rise in French, Italian, and Spanish yields set off a new wave of the concerns as countries at the core of the EuroZone are now seeing a significant rise in their cost of borrowing.
The Italian 10-yr yield climbed above the 7.00% mark before European Central Bank (ECB) buying dropped it back below that mark. Things eased up further on Friday and the Italian 10-yr yield finished the week at 6.62%.
The Spanish 10-yr yield ran above 6.80% following Thursday's auction, but it has also pulled back since then and finished the week at 6.31%.
In addition to concerns about Italy and Spain, ‘AAA' rated France now finds itself in the "cross hairs" of bond vigilantes as selling of French OATs ran its 10-yr yield as high as 3.80% before the ECB acted, and swiftly bought French government debt in an effort to bring down its yields. The French 10-yr yield closed the week out at 3.45%. In the USA, the 10-yr yield was finally able to crack the 2.00% support level that has been in place for all of November. But, it bounced back above that level Friday to finish the week at 2.01%. A flight into the long bond dropped its yield below 3.00% and it managed to close out the week at 2.99%. The yield curve flattened over the course of the week with the 2-10-yr spread tightening by about 17 bps. Next week will see the US Treasury sell $35-B in 2-yr Notes (Mon.), $35-B in 5-yr Notes (Tues.) and $39-B in 7-yr Notes (Weds.).
Economic data is fairly light and volume could be impacted by the shortened Thanksgiving Holiday week.
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