Three economic reports this morning at 8:30; Weekly Jobless Claims were up 2K to 393K, last week's claims were revised to 391K frm 388K, continuing claims were up 68K to 3.691 mil. Overall claims were about as expected. October Personal Income was expected up 0.3%, it increased +0.4% the highest since March; Personal Spending was expected up 0.3%, as reported spending up 0.1%, the Personal Savings rate at 3.5% was up frm 3.3% in September. October Durable Goods Orders expected -1.0% was -0.7%, excluding volatile transportation orders up 0.7% with forecasts of unchanged. Prior to the three reports the 10-Year Note traded unchanged at 1.93% where there is resistance, at 9:00 the 10-Year Note -5/32 to 1.94% and mortgage prices -7/32 (.22 bp).
The 8:30 data was mostly in line with forecasts but treasuries and mortgages being hit this morning as the contagion in Europe may be infecting Germany now. Germany tried to sell bunds but the auction failed miserably. It failed to reach its maximum sales target of 6 billion euros ($8B) at an auction of securities due in January 2022. Total bids amounted to 3.889 billion euros, falling short by 35%, according to data from the Bundesbank. The securities were sold at a yield of 1.98%. Germany the rock of the EU unable to sell its debt is worrisome and another shock to markets. The ECB was said to have bought more Italian bonds today, but no direct confirmation frm the ECB. In Greece.At 9:30 the stock market opened weaker; the DJIA started down -95 and continued to decline, NASDAQ -20; the 10-Year Note yield at 1.96% +3 bp. mortgage prices at 9:30 -9/32 (.28 bp).
In Europe and China the purchasing mgrs indexes are declining as Europe heads for another recession and dragging the world down with it. Europe needs so much money to head off the potential of sovereign defaults that it is becoming clear that in the end of it all there will be defaults of a lot of debt that will drag Europe's banking system into crisis. Rating agencies are poised to lower credit ratings for France, with the failure of German bund sales today France is likely to see a downgrade within a week or so.
At 9:55 the Universoty of Michigan Consumer Sentiment Index, expected at 64.6 from 64.2, was 64.1; at the end of October the index was 60.4, the 12 month out expectation index unchanged at 52.
Finally today, at 1:00 the Treasury will auction the third auction this week with $29B of 7-Year Notes. The 2-Year and 5-Year Note auctions on Monday and Tuesday saw strong demand, likely the 7-Year Note will also be well bid.
The key 10-Year Note hit a chart resistance level at 1.93% the low yield on 11/9, from there the 10-Year Note jumped to 2.12% before returning to 1.93%. While rates are higher this morning and prices lower, with equity markets falling and Europe spinning rapidly rates in the U.S. should not increase much. That said, the technical failure so far at 1.93% is something to keep in mind. The safety moves to treasuries recently has slowed; Europe news has been continuously bad yet the 10-Year Note yield has generally steady suggesting investors are better positioned now. Volatility will continue as uncertainty dominates all thinking these days.

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