Closing Report
Bonds were well-bid on the day as equities sold off across the board on the final day of trading in 2007. U.S. Treasuries recorded their best yearly returns in five years amid a large scale flight to quality in the final months of 2007. The 30-yr. traded within the 115-25 to 116-23 range, closing at 116-12. The 10-yr. closed at 113-12 and traded within the 112-31 to 113-18 range. The 5-yr. finished at 110-09 while spending most of the day between 110-00 and 110-9. The 2-year traded within a narrow 5-tic range before closing at 105-04. Fed Funds put the implied chances of a 25bps cut at 92%.
Equities started the day lower and never quite recovered, despite the brief immediate boost brought on by better than expected Existing Home Sales data. Light volume ahead of New Year’s Eve likely explains much of the losses. Dow Futures were down 110 on the day to close at 13317. S&Ps closed down 1150 to 1474.00. Nasdaq futures finished down 22.25 to 2102.75
Gold sold off as the dollar strengthened against EUR and GBP, closing down 5.80 to 837.00. Platinum and copper also posted declines today of 18.8 and 3.70 respectively. Silver eked out a marginal gain, finishing up 0.15 to 14.910.
Wednesday’s releases include Johnson Redbook weekly retail sales at 8:55am. Construction Spending data for November will be released from Commerce at 10:00am. It is expected to fall 0.4% m-o-m. Also at 10:00am the ISM Manufacturing Index comes out, expected to be 50.5 after a prior reading of 50.8. Finally, FOMC minutes from the December 2007 meeting will come out at 2:00pm.