Italian Bond Yields Front And Center

The market is lower in early trading on some softer economic data as well as continued concerns out of Europe. The Greek PM faces his vote of confidence today, and there has been rumors out of the G20 meeting that members are not all on the same page in terms of IMF resources and potential role in the bailout.

While Greece has been front and center, Italian bond yields have continue to rise, and I believe they are not at the highest levels since the creation of the euro. Italy is a much bigger problem in terms of the size of its debt relative to Greece, so it is normal that this would unnerve the markets. Hopefully the ECB and IMF act quickly. Also, one thing Italy has going for it is that it funds a lot of its debt internally and rising yields may entire domestic buyers.

In economic news, the monthly jobs report showed the economy added 80,000 payrolls. That figure was slightly less than the 85k consensus, but the revisions to both the September and August figures were revised nicely higher with a net +102k jobs added to the prior figures. Also, the unemployment rate ticked lower to 9.0%.

In corporate news, Groupon (GRPN) priced its IPO a little above the expected range at $20. Last I saw it was trading near $27. That's a great first day showing, but I am not too positive on the long-term fundamentals for this company.

Asian markets were higher overnight; the 10-year yield is lower to 2.03%; and the VIX is +5% higher at 32.10.

Trading comment: Tough juncture. I think investors are getting their arms around the European problems and trying to price it in. But the possibility of Italy flaring up would be another shoe to drop. The VIX stubbornly above 30 means that angst is still elevated, and the pu/call ratio has been above 1.0 for a long time now. That said, I still think dips can be bought as a bid should surface under the market for the near-future. I'm watching SPX 1220-1225 to start legging in.