Market Volatility Continues

News out of Europe put a dent in the Bond rally and cut into Stock losses, though Bonds did have a positive day. The late day sentiment could carry over into tomorrow’s trading as the news comes out of Europe.

MARKET WRAP: The Bond markets rallied today after last week’s slide but the gains were cut after news from Europe said the IMF, EC and the ECB (Troika) may be close to a deal to bailout Greece. But Mortgage Bonds did end the day to the upside as the 3.5% coupon closed at 101.59 up 50bp, although below resistance. The Dow lost 108.08 to 11,401.01 but it was down 260 points during the session. The S&P 500 fell 11.92 to 1,204.09 while the Nasdaq dropped 9.48 to 2,612.83. There were no economic reports today. Oil settled at $85.70/barrel down $2.26. Tomorrow, Housing Starts and Building Permits will be released. The Fed will begin its 2-day meeting tomorrow.

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It’s a great time to own Gold

It’s a great time to own Gold : Stock markets were unchanged today giving the Bond markets a reason to run higher. The 3.5% coupon jumped 25bp to end at 101.56, but ended below resistance levels set last October. Tech shares were sold aggressively today and pushed money into Bonds and utility related stocks. The Dow saw a meager gain of 4.28 to end at 11,410.21, the S&P saw a paltry gain of 1.13 to 1,193.89 while the Nasdaq dropped 11.97 to end at 2,511.48. Oil saw a gain of 93 cents to $87.58/barrel on lower inventories while Gold closed at a record $1,791.20 up $8.80. Tomorrow’s data includes Initial Claims, CPI, Philly Fed Index and Existing Home Sales.

Bond Market Continues To Remain Volatile

Bond markets fell today but were able to close near unchanged after a slightly better than expected report on GDP and after a 5.6% rise in Existing Home Sales for November. Our benchmark 4% coupon fell 3bp to end at 99.0. Stocks posted modest gains on the data with the Dow up 26.33 to 11,559.48, the S&P 500 rose 4.24 to 1,258.84 while the Nasdaq rose 3.87 to 2,671.48. Tomorrow’s economic data includes Personal Income & Spending, Core PCE inflation gauge, Durable orders, Initial Claims, New Home Sales and Consumer Sentiment. The Treasury will announce the size offerings for next week’s 2, 5 and 7 year notes. The Bond markets will close early tomorrow at 2:00pm ET

Stocks Rally after Holiday

NEW YORK (AP) — Stocks rose Tuesday after investors tried to recover some of the big losses that piled up in recent weeks following a string of disappointing economic reports.

The jump in stocks came after investors looked past a report that growth in services businesses slowed last month. The Institute for Supply Management, a trade group of purchasing executives, said its index of services companies fell to 53.8 last month from 55.4 in May.

Economic reports have routinely fallen short of economists’ forecasts in recent months. That has investors worried that the growth is not coming as quickly as expected and any expansion will be slow for a prolonged period.

Overseas markets rose as investors found stock prices more reasonable after the recent sell-off and Australia’s central bank provided a positive forecast for the country’s economy.

Australia’s economy is heavily reliant on exporting raw materials, so growth there has helped the industry. Energy and material stocks rose in early trading.

In midmorning trading, the Dow Jones industrial average rose 152.01, or 1.6 percent, to 9,838.49. The broader Standard & Poor’s 500 index rose 18.17, or 1.8 percent, 1,040.75, and the Nasdaq composite index rose 42.23, or 2 percent, to 2,134.02.