Consumer Confidence Rises, and Bonds' Confidence Falls

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Where there's a will, there's a selloff.

Volume barely exceeded 60% of an average Tuesday for this past month, but the skeleton crews employed by dealers still took Treasury prices down a bit due to several strong economic reports. Ten-year notes reached high yields for the year, but the 30-year bond finished a basis point off its 1999 closing high.

The

Conference Board's

Consumer Confidence Index

and weekly retail sales reports typically rank low on the totem pole in terms of importance to the market, but strength in those releases was enough to knock a few more ticks off bond prices.

Lately the 30-year Treasury bond was down 6/32 to 95 13/32, leaving the yield virtually unchanged at 6.476%, still below the year's highest closing yield of 6.487%, reached

last Thursday.

The 10-year note closed at 6.421%, compared with Thursday's 6.417% close. Tracker

GovPX

reported 10-year volume at 39.5% less than the usual for Tuesdays in the past month.

The Consumer Confidence index rose to 141.4 in December, second-highest reading for this release ever. The highest reading was in October 1968, when it hit 142.3. Economists as polled by

Reuters

were expecting the index to fall to 135 from a revised 137 in November.

George Simon, market analyst at

A.G. Edwards

, said more attention would have been paid to this figure were market activity in full swing, rather than winding down. Analysts believe the market has squeezed out most of this year's negativity, but poor trading could resume next week when fully staffed dealers ponder the possibility of more

Fed

rate hikes.

"We would have been down further if it had been a different week," Simon said. "There was not too much attention paid. It was well above consensus, and that would normally have been a bigger negative."

Two weekly retail reports --

BTM/Schroder

and the

Redbook Retail average

-- showed sales last week rising 1.2% and 1.7%, respectively.

After declining for four months in a row,

existing homes sales

increased to a seasonally adjusted annual rate of 5.09 million homes in November, a 6% increase from October's 4.8 million rate.

A weakening housing market is generally considered a leading indication of future spending and, after reaching a record 5.63 million rate in June, it appeared that the pace of housing sales was finally trailing off.

For what it's worth, economists were looking for this increase, predicting sales to rise at a 5.02 million clip, according to

Reuters

.

Tomorrow's only monthly economic release is the Conference Board's index of

leading economic indicators

, forecast to rise 0.2%. A strong reaction out of the market is unlikely.

"Everything that comes out is going to be muted or overstated because of very little volume," Simon said.