The news of the day for policy makers, politicians and the financial standing of the US will be on full display today as more than 3 years after the subprime mortgage market started to implode, a debate about the future of our socialized housing finance system finally takes place. In terms of speculation of a pre Nov election surprise/gift from FNM and FRE to those borrowers who are under water, nothing is expected. Ireland had two solid bond auctions selling 3 1/2 yr and 10 yr debt, sending their yields and CDS lower. Spain also had a good auction too and the safety grab of German bunds and US Treasuries are reversing a touch. Shrugged off was the weaker than expected German ZEW # (expectations of future growth within 6 mo’s) because the current conditions component was almost twice as high as expected at the highest since Jan ’08. The Shanghai index closed up to just shy of the highest since May.
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