Thursday, December 29, 2011

Higher markets on easing tensions over European debts

Dow was up 83, advancers over decliners almost 4-1 & NAZ rose 12.  Bank stocks found buyers with the Financial Index rising 2 to the 175s.

The MLP index rose 1+ to 387 (3 short of its record) & the REIT index was up 2+ to 233.  Junk bond funds were mixed to higher & Treasuries pulled back after yesterday's rally.  Oil fell for a 2nd day on the growing risks from Europe's debt crisis.  Dec has been a rough month for gold, although it's still up YTD with 11 straight years of gains.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG12.NYM...Crude Oil Feb 12...98.95 ...Down 0.41  (0.4%)

GCF12.CMX...Gold Jan 12...1,532.10 ....Down 30.90  (2.0%)

Get the latest market update below:

Jobless Claims in U.S. Drop to Three-Year Low in Past Month

Photo:   Bloomberg

New claims for unemployment benefits rose more than expected last week but the underlying trend continued to point to improving labor market conditions.  Claims for unemployment benefits increased 15K to 381K, according to the Labor Dept.  The prior week's claims data was revised up to 366K from the previously reported 364K & higher than 375K predicted.  Because of a public holiday on Mon, claims from 7 states had been estimated.  The 4-week moving average fell 5K to 375K, the lowest level in 30 months.  The number still receiving benefits under regular state programs rose 34K to 3.6M.  The number on emergency unemployment benefits fell 15K to 2.93M in the latest week.  7.23M were claiming unemployment benefits, up 79K from the prior week. 

Jobless Claims in U.S. Hit Three-Year Low

  • <p>               In this Dec. 27, 2011 photo, a sale pending sign hangs in front of a single-family home in Brookline, Mass. The number of Americans who signed contracts to buy homes in November rose to the highest level in a year and a half. (AP Photo/Steven Senne)
Photo:   Yahoo

The number of contracts to buy homes in Nov rose to the highest level in a year & a half.  While such a gain could suggest a turnaround for the depressed housing market, a growing number of buyers are canceling contracts at the last minute, making it a less reliable gauge.  The National Association of Realtors said that its index of sales agreements jumped 7.3% last month to a reading of 100.1 (a reading of 100 is considered healthy).  The last time the index was that high was in Apr 2010, one month before a federal home-buying tax credit expired.  Contract signings usually indicate where the housing market is headed but there's a one- to 2-month lag between a signed contract & a completed deal.  Homes are the most affordable they've been in decades.  Long-term mortgage rates are at historic lows & prices in most metro areas have tumbled since late 2006.  Yet this year will likely be the worst year for new-home sales in history.  Sales of previously occupied homes are just barely ahead of 2008's dismal figures, the worst yearly showing since 1997.

Italy auctioned €7B ($9B) of debt, bringing the total raised this week to almost €20B.  This underscores how the ECB is helping the world’s 4th-biggest borrower tap markets. But today’s sale fell short of the €8½B target even as borrowing costs declined from last month.  Italy sold €9B in bills yesterday at about half the rate of the previous sale last month, its first auction since the ECB loaned €489B to banks to ease credit amid the region’s debt crisis.  With an economy sinking into its 4th recession since 2001, the gov expects to raise almost €500B next year.  It has to repay about €53B in Q1 from the region’s total maturing bonds of €157B.  Somewhat mitigating this news is the ECB was said to buy the nation’s debt as part of its efforts to stem the spread of the financial crisis.  The situation remains fluid.

Italy Sells 7 Billion Euros of Bonds as Yields Fall

It's difficult too make much of today's rally on light volume.  There is an upside bias this week as financial managers like higher prices to make year end balance sheets look better, especially after after a drab year like this one.  The European debt mess is still lumbering along, far from being resolved.  On the bright side, MLPs are shooting for a new record, something very few securities can claim.

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