The House of Representatives last night voted 277 to 148 to approve an $858 billion tax package extending the Bush-era tax cuts. After the news S&P futures are 1.50 points lower at 1,237 and benchmark interest rates have fallen. The 10 year Treasury note is +8/32 at 93-19 yielding 3.392%. The Fannie Mae 4.5 MBS coupon is +8/32 at 101-14

“As we close in on year end, the Santa Claus rally in stocks has lifted sentiment well above normal levels — more than a full standard deviation when measured by the bull-bear ratio in the Investors’ Intelligence Survey,” said economists at BMO Capital Markets. “This looks very similar to last year, when stocks and sentiment gathered steam into year end, giving way to a modest correction by mid-January.”

Overseas, credit rating agency Moody’s downgraded Ireland’s debt five notches to Baa1. Also in the news, from Reuters, North Korea said on Friday it would strike again at the South if a live-firing drill by Seoul on a disputed island went ahead, with an even stronger response than last month's shelling that killed four people.

Key Events Today:

10:00 ― Leading Economic Indicators, a composite measure that attempts to track turning points in the economy, is expected to rise by 1.1 points in November after gaining 0.5 points in each of the last two months.  A November gain would mark the fifth straight advance and point to continued economic expansion in the U.S.

Economists at Deutsche Bank say the index has been the subject of some debate recently because the annual rate of growth has leveled out since peaking in April. 

“We are not concerned as our expectation of 1.1% sequential growth in the LEI would keep the annualized rate of growth well above 6%,” they wrote. “We would only have reason to fret in the event that this series were to go negative on an annualized basis. This appears unlikely at least in the near term, given the strength in equities, steepening yield curve and falling jobless claims.”

10:15 ― Fed buys $1.5 to $2bn Treasury coupons maturing between 08/15/28 and 11/15/40