Wednesday, December 30, 2009

Markets edge lower despite higher manufacturing data

Dow slipped 6, decliners over advancers 5-2 & NAZ declined 5. Banks were also down, the Financial Index is still stuck in its sideways trading range.


% Change

The high yielders had another stellar month with minor profit taking this week. The MLP index & REIT index are each off 1 in semi-holiday trading. Junk bond funds also experienced a little profit trading. Meanwhile the yield on the 10-year Treasury bond lumbers along at 3.81%, near its yearly highs of 4%.

Alerian MLP Index --- 1 month

Dow Jones REIT Index --- 1 month

Barclays Cap Hi Yld Bond ETF - 1 month

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Oil & gold are just waffling around, but oil has a positive undertone. Oil wants to take out 80 while gold is still looking to find a base after having a very bad month..

CLG10.NYM...Crude Oil Feb 10...79.07 ...Up 0.20

GCF10.CMX...Gold Jan 10...1,087.50 ...Down 9.50

OIL (ETF) --- 1 month

GLD (ETF) --- 1 month

The Institute for Supply Management-Chicago Inc. reported companies expanded more than anticipated in Dec. Its business barometer rose to 60, exceeding all estimates to the highest level in 4 years. Readings above 50 signal expansion. This expansion was fueled by gov incentives & discount pricing along with rising global demand which have reduced inventory stockpiles.

U.S. Business Gauge Climbs to Highest Level Since '06 as Companies Expand

Manufacturing index - 1 year

photo: Bloomberg

Treasuries are headed for the worst year since 1978 following their best year last year over the same time span. Massive gov borrowings with no end in sight are the main reason. Expectations are for Treasury interest rates to climb as demand for money knows no limits. Today they will auction $32B of 7-year notes, the last of 3 auctions this week totaling $118B.

Treasuries Set for Worst Year Since 1978 as U.S. Steps Up Sales

GMAC Financial Services is expected to get about $3½B in additional gov aid to help it absorb mortgage losses after already receiving $12½B in aid during the last year. This is one more reminder that all is not rosy with the economic recovery.

GMAC Said to Discuss Getting More Than $3 Billion in Extra Government Aid

Not much happening today, again on a very quiet day. The graph below shows Dow has had a difficult time making headway to new highs in Dec. That could be a signal that Jan effect will not happen.

Dow Jones Industrials --- 1 month

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