Daily Market Color

Quiet Trading Day as Thanksgiving Holiday and Easing of Russia / Turkey Tensions Overshadow Robust Economic Calendar

Equities and Treasuries both fluctuated on either side of unchanged while oil prices declined off the back of de-escalating tensions between Russia and Turkey. Russia defiantly pledged to continue flying missions near Turkish air space and spoke of potential retaliatory economic measures, but both countries stated they have no intention of engaging in a military conflict (a day after Turkey shot down a Russia warplane flying close to the Syrian border).  Regardless, the conflict threatens to complicate international talks in Vienna aimed at finding a political solution for Syria.

Today’s economic calendar was heavy, and the results were generally positive before we get a lull in data for the remainder of the week.  A report showed US consumer spending, the largest contributor to GDP, was a disappointment (0.1%a vs. 0.3%e), but durable goods orders, business spending plans, jobless claims, new home sales, and composite PMI all surprised to the upside.  Strengthening labor market conditions continue to trickle into other areas of the economy including wages/salaries, which experienced the largest increase since May, and should eventually provide a boost to consumer spending.  The gain in PMI indicates the manufacturing sector is stabilizing as it recovers from the effects of the strong dollar and weak growth outlook abroad.

Aside from the data, the market took down supply in the form of the $29 billion 7-year auction.  Fixed income markets are open normal hours today, but liquidity is light and will dry up as the day goes on heading into tomorrow’s holiday.  There is an early close on Friday.


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