This week a number of key economic reports on tap. Nov Housing starts and permits, existing home sales, Philly Fed business index, personal income and spending for Nov, and final Q3 GDP report. Of course the Cliff debate and negotiations still headline the markets. Republicans offering to increase taxes on millionaires but will that satisfy the President? Likely not given he is insistent on increasing taxes on a lot more tax payers. This week we can expect trading volume to dissipate as the week progresses with Christmas next Tuesday and short markets on Monday.
The question this week is whether or not Congress and the Administration can come to an agreement to avoid going over the Cliff. If no progress is made politicians will have only a few days next week to get something accomplished. Treasury will auction $99B of notes beginning Monday through Wednesday (2 yr, 5 yr and 7 yr notes) on sale. Technically the near term outlook remains slightly bearish for the bond and MBS markets. The bond market held captive to the Cliff talks as are the global stock markets.