Surprising that treasuries would be trading higher today, as the equity markets are showing strength this morning, up 0.5% while the 10-year bond is now at 1.94%....so who's right? Typically the best bet is to listen to the bond market, but in this case I think the equity market is correct. I think today's the last day we will see much volume, and with today's rise, I would expect to see more of the same as the Santa Claus rally continues into the year, albeit at a lower pace than we would have liked to see.
Here are 4 points on why we should listen to the equity market today:
- Encouraging Drop In Weekly Jobless Claims - New U.S. claims for unemployment benefits dropped last week to its lowest in more than 3-1/2 years, suggesting the labor market recovery was gaining speed. Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 364,000, the Labor Department said. That was the lowest level since April 2008.
- Downward Revision To 3Q GDP But Data Points To Positive Growth Trends - U.S. economic growth was slower than previously estimated in the third quarter on a sharp drop in healthcare spending, but stronger business investment and a fall in inventories pointed to a pickup in output in the current period. Gross domestic product grew at a 1.8 percent annual rate in the third quarter, the Commerce Department said in its final estimate, down from the previously estimated 2 percent. Economists had expected growth to be unrevised at 2 percent. Though spending on healthcare dropped by $2.2 billion, spending on durable goods was stronger than previously estimated, indicating household appetite to consume remains healthy.
- Surprise Jump In Consumer Confidence - U.S. consumer sentiment improved in December to its highest level in six months as Americans felt better about the economy's prospects for the year ahead, a survey released on Thursday showed. The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment rose to 69.9 from 64.1 in November. It topped the median forecast of 68.0 among economists polled by Reuters and beat December's preliminary figure of 67.7.
- Strong Leading Indicators Data - U.S. NOV LEADING ECONOMIC INDICATORS +0.5 PCT (CONSENSUS +0.3 PCT) VS OCT +0.9 PCT
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