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Financial Market Highlights 12-20-12
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.