Today's Market Commentary The first day of 2009 looked strikingly similar to the last day of 2008 as stocks rose nicely on Friday and Treasuries suffered somewhat of a rout. While not the focal point of most investors, the long-bond has suffered several consecutive days of steep price declines, falling about three points on both Wednesday and Friday. This morning, it is down two points. Volume was light across all markets throughout last week. The sell-off in Treasuries came despite an extremely weak ISM manufacturing report. The ISM’s index fell to 32.2, its lowest level since 1980 and among its lowest ever. Expectations were for the index to come in at 35.4. This week, the economic and other releases are substantial and should be influential. Carmakers report December sales today, the FOMC releases its December minutes tomorrow, and the December payroll report will be released Friday. Those December minutes could be especially interesting given the shift in policy at that meeting and the wide range of tools discussed in the announcement. Congress will begin work this week on an enormous stimulus plan which is now expected to come in around $800 billion and include $300 billion in tax cuts to businesses and individuals. Reportedly, the numbers are so big that Congressional wish lists are not long enough to use all the dollars. Can you imagine asking Santa for every toy on earth and him telling you that your list isn’t long enough? The looming government spending is one of the weights on the Treasury market currently. The Israel / Hamas conflict continues, increasing uncertainty and boosting the dollar.
Current Yield Curve
Market Movements Term Closing Yield Daily Price Change Current Yield Price Change   MARKET MOVEMENTS   01/02/2009 TODAY 7:30 A.M.     Close Change 3 mo 0.09%   0.10%           6 mo 0.28%   0.29%     Bond Contract 135-15 -89.5 1 yr 0.38%   0.40%     Dollar Index 81.839 0.531 2 yr 0.87% -6 0.87% -2.5   CRB Index 233.92 4.38 3 yr 1.11% -12.25 1.13% -4.875   Dow Jones 9,034.69 258.3 5 yr 1.70% -22.5 1.74% -12.5   Crude Oil 46.34 1.74 10 yr 2.40% -57 2.47% -26.5   Gold 875.4 -6.65 30 yr 2.82% -115 2.87% -56   1 mo LIBOR 0.43 -0.00625
Chart of the Day ISM Manufacturing Index Source: Bloomberg
This Week's Economic Calendar Date/Time (Central) Indicator Period Est. Actual Prior Revised 1/5 9:00 Construction Spending (MoM) NOV -1.4% -- -1.2% -- 1/6 9:00 ISM Non-Manf. Composite DEC 37.0 -- 37.3 -- 1/6 9:00 Factory Orders NOV -2.3% -- -5.1% -- 1/6 13:00 Minutes of Dec. 16 FOMC Meeting Released DEC -- -- -- -- 1/7 6:00 MBA Mortgage Apps. 2-Jan -- -- 0.0% -- 1/8 7:30 Initial Jobless Claims 3-Jan 543K -- 492K -- 1/8 7:30 Continuing Claims 27-Dec 4483K -- 4506K -- 1/8 14:00 Consumer Credit NOV $0.1B -- -$3.5B -- 1/9 7:30 Change in Nonfarm Payrolls DEC -500K -- -533K -- 1/9 7:30 Unemployment Rate DEC 7.0% -- 6.7% -- 1/9 7:30 Change in Manf. Payrolls DEC -103K -- -85K -- 1/9 9:00 Wholesale Inventories NOV -0.8% -- -1.1% --