We will start floating this morning but unless there is a surprising reversal in rate markets by the end of the day we will lock and not float overnight.

At 10:00 Oct existing home sales, expected to be +2.3%, were up 10.1% to 6.10 mil annualized. Sept was revised to +8.8% frm +9.4%. The median sales price $173.100.00 -7.1% frm Oct 2008. 1st time homebuyers accounted for 33% of the sales. Sales according to the data this morning are up 23.5% from 2008 Oct. Based on the sales there is a 7 month supply; inventories declined 3.7% in Oct. No immediate reaction to the 10:00 report in the bond and mortgage markets; the DJIA however jumped about 20 points from pre report levels.

The first of three Treasury auctions at 1:00 this afternoon, $44B of 2 yr notes, should see strong bidding. Tomorrow/s 5 yr and Wednesday's 7 yr will likely go well but not as strong as today's 2 yr. $118B is the total for all three; markets and investors are not concerned yet with the exploding US deficits and with the dollar declining foreign investors are liking the idea of using the weak dollar to take advantage of what many believe good returns. The market will be watching the auctions, being the first in a run up to record levels 5-and-7-yrs which have had a billion added to each offering, taking them to $42B and $32B respectively.

No support for the bond market this morning as the dollar, which many had thought might be temporarily basing, is being slapped again this morning. It doesn't totally erase the view that the dollar has found momentary support however, as long as $1.50 per euro holds we still have a chance for short term dollar improvement (presently $1.497 per euro). Longer term, the outlook for the dollar isn't good. With the Fed having to keep US rates low in an attempt to keep the economy from double-dipping there is little chance the dollar will firm. It is eventually inflationary but that is down the road; in the meantime there is little concern as investors in equities are benefiting as the dollar crumbles. Go around the world; no country wants a strong currency now. Its who can beat up their currency to attract investment.

Bloomberg reporting this morning that currency experts believe the dollar will not find strength until the end of 2010 based on the Fed's intentions to keep rates low for that "extended" period. Based on present thinking in the markets the Fed will keep rates low through most of 2010. The U.S. will be one of five economies represented in the Group of 10 to wait until after mid-2010 to raise benchmark rates, according to median predictions in Bloomberg surveys of as many as 60 economists. The Fed, the European Central Bank, the Bank of England and the Swiss National Bank will increase borrowing costs in the third quarter and the Bank of Japan will remain at 0.10% at least through March 2011, the surveys show. By the end of Q3 2010 the Fed’s target for overnight loans between banks will be 1 percent, compared with the ECB’s 1.5% benchmark.

It is essentially a three day week with Thanksgiving on Thursday and an early close on Friday. After Wednesday noon there will be skeleton crews manning the trading desks with orders not to rock the boat. The week however is packed with economic data.

Tuesday;

8:30 Q3 GDP revision (+2.8% frm +3.5%)

9:00 Sept Case/Shiller home price index (-9.05% frm -11.23% in Aug)

10:00 Nov Consumer confidence (47.5 frm 47.7)

FHFA Sept home price index (+0.1% frm -0.3% in Aug

1:00 $42B 5 yr note auction

Wednesday;

8:30 Oct personal income (+0.2%)

Oct personal spending (+0.5%)

Weekly jobless claims (-5K to 500K)

Oct durable goods orders (+0.5%, ex transportation orders +0.7%)

9:55 U. of Michigan consumer sentiment index (67.0 frm 66.0)

10:00 Oct new home sales (+0.8%)

1:00 $32B 7 yr note auction

Thursday

All Markets Closed

Friday

Markets closed at 1:00

The run toward commodities continues as the world runs away from currencies. Gold up another $20.00 this morning crude oil up over $2.00. Crude up 50% this year.

At 9:30 this morning mortgage prices were only 2/32 lower on the session; however earlier trade had mortgage prices as low as -5/32. Lot of chop already in mortgage prices. The 10 yr note isn't getting worse but not improving either from early lows.

PRICES @ 10:10 AM

10 yr note: 99.25 -6/32 3.40% +3 BP

5 yr note: 100.25 -1/32 2.21% +1 BP

2 Yr note: 100.15 -1/32 0.74% +1 BP

30 yr bond: 100.22 -11/32 4.33% +2 BP

Libor Rates: 1 mo 0.235%; 3 mo 0.261%; 6 mo 0.485%; 1 yr 1.020%

30 yr FNMA 4.5 Dec: @9:30 101.23 -2/32 (.06 bp) (-2/32 (.06 bp) Frm 9:30 Friday)

15 yr FNMA 4.0 Dec: @9:30 102.00 -2/32 (.06 bp) (-6/32 (.18 bp) frm 9:30 Friday)

30 yr GNMA 4.5 Dec: @9:30 101.29 -2/32 (.06 bp) (-1/32 frm 9:30 Friday)

15 yr GNMA 4.0 Dec: @9:30 102.25 -2/32 (.06 bp) (/7/32 (.22 bp) frm 9:30 Friday)

Dollar/Yen: 88.90 +0.03 yen

Dollar/Euro: $1.4987 +$0.0128 (dollar weak)

Gold Dec: $1172.30 +$25.50

Crude Oil Dec: $79.38 +$1.91

Goldman-Sachs

Commodity Index: 520.64 +11.98

DJIA: 10483.22 +165.26

NASDAQ: 2187.29 +41.26

S&P 500: 1111.43 +20.05