» Financial Market Highlights 12-20-12 Decision Economics

Financial Market Highlights 12-20-12

Posted December 20, 2012 by rvillareal

Fiscal Cliff Continues to Loom Over Markets

  • Treasury yields higher in December, near 1.8% for the 10yr.  
  • Operation Twist gets replaced by outright MBS purchases of $45 Billion a month.
  •  Fed Commits to low rate until progress toward full employment is clearly evident.[private]
  • VIX below historical peaks, but is unusually calm amid Fiscal Cliff, Eurozone, China, and Middle East talks.
  • DE continues remains Solid Overweight on Equities (65%; 55% neutral).
  • S&P Relative Sector Performance: Consumer Discretionary stocks powered higher relative to Staples. DE is Overweight both Consumer Sectors as Consumer is still at the center of recovery.
  • High frequency data from China suggest an economy en-route for stability.
  • Mortgage rate continues to remain low and housing market appears to have bottomed. DE is overweight housing industries such as home building, and home furnishings.