12/20/07 - MOSTLY GOOD AND A LITTLE BAD

The plethora of information for the markets to digest arrived this morning and did not deviate greatly from expectations.  Most of the news was bond-friendly: leading economic indicators fell .1% beyond expectations signaling further recession potential, jobless claims were slightly higher than expected bringing the moving average to a 2 year high.  The GDP showed an expected level of growth, though analysts predict it will slow down in the fourth quarter.  The only negative news for bonds was the component of the GDP, Personal Consumption Spending was revised up by .2%, which is a sign of inflation.  As we know, inflation is bad for bonds.

As of right now the markets are flat, but I am getting conflicting reports from different sources on bond prices.  One bond broker is indicating sharp declines currently, but most others are indicating bonds are flat this morning.  This means rates should be as good or better than they were yesterday afternoon.  But keep an eye on the news and this blog for an update on that conflicting information.