On just about any other day of the year, today’s schedule of economic events would be well worth a few moments of consideration, and certainly capable of eliciting a reaction in markets. There are two important reports right off the bat with Durable Goods and GDP at 830am. Forget what you’ve heard about the Consumer Spending data also being at 830am (have you even heard anything about that?) because it’s at the abnormal time of 10am today, along with New Home Sales. 5 minutes earlier, Consumer Sentiment will have been released, with the ‘inflation expectations’ component being the only somewhat interesting part. Finally, the afternoon brings the week’s most relevant Treasury auction in the form of 5yr notes.
Now… the preceding paragraph had words like “interesting” and “relevant.” In fact, these are gross overstatements at best, and downright, filthy lies at worst. I wish you could go back and ‘UNread’ them just as much as I wish I could ‘UN-write’ them, because it’s UNnecessary for markets to even be open on Christmas and Thanksgiving weeks. Still, it’s unfortunately unfeasible (or infeasible if you prefer, and I do) to close down markets for an entire week just because I’d like to know what it’s like to have a non-holiday weekday off with the family.
Ahem… The point is that holiday weeks like are completely overwhelming in their ability to rende pointless what would otherwise be relevant events. In fact, I’d suggest that any market movement today that seems driven by the data will instead simply be the serendipitous byproduct of an illiquid market. In other words, if there are normally 300 traders trading ‘something,’ there could conceivably be an even balance in positions (150 vs 150). But if there are only 3 traders trading, suddenly things can’t help but be lopsided.
It’s those imbalances that move markets on weeks like this. There’s no guarantee we see any movement, but if we do, here are the various technical levels in the immediate vicinity of Monday’s closing yields (10yr Treasuries)–this time with a visual! Fannie 3.0 MBS would have made for a less interesting chart, since we’re basically dealing with 101-00 and 101-16.