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Dynegy Board Accepts $6.6 Billion Icahn Buyout Bid—But Keeps Options Open

Mortgage Rates Up, Applications Down (CNBC via Reuters) "Applications for U.S. home mortgages declined last week as home loan interest rates rose for a fifth consecutive week, to seven month highs, an industry group said on Wednesday. Mortgage application The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage application activity declined 2.3 percent to 589.7 in the week ended Dec.10. Application activity slumped as fixed 30-year mortgage contract rates rose to 4.84 percent in the week, the highest level since early May, from 4.66 percent in the prior week, according to the MBA data."

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Spain's Bonds Down [Again]; Spain on Credit Watch [Again] (Bloomberg) "Spanish government bonds fell for an eighth day after Moody’s Investors Service said it may cut the nation’s credit rating, citing the potential struggle for the government to fund itself next year amid losses at banks. The decline pushed the 10-year Spanish yield up to within nine basis points of the highest since September 2000. Portuguese bonds fell after costs rose at a 500 million-euro ($664 million) sale of Treasury bills. Spain plans to sell bonds tomorrow."

Germany's Merkel Opposes Eurobond (New York Times) "Digging in her heels ahead of a European Union summit meeting, the German Chancellor Angela Merkel insisted Wednesday that the introduction of shared “eurobonds” was not the answer to Europe’s debt challenges. Speaking to the German parliament, Mrs. Merkel made clear that Germany was not going to bow to pressure from countries such as Italy and Luxembourg — or from former top ministers in her previous coalition government — who support issuing jointly backed bonds as a way to restore long-term confidence in the euro. The 'collectivization of risks' would be a mistake, Mrs. Merkel said."

Selloff in Muni-Land (Wall Street Journal) "Prices of municipal bonds fell sharply for the second day Tuesday, driving yields on long-term bonds to the highest points in more than 18 months, as investors worried about the impact of the end of a federally subsidized borrowing program. The yield on a closely watched index of high-grade, tax-exempt 30-year muni bonds rose to 4.84%, its highest level since March 2009, according to Thomson Reuters Municipal Market Data. The yield on 10-year bonds climbed to 3.24%, the highest since June 2009. Yields move inversely to prices."

Dynegy Board Accepts $6.6 Billion Icahn Buyout Bid—But Keeps Options Open (MarketWatch) Dynegy Inc.’s board agreed to a buyout offer of $5.50 a share from Icahn Enterprises LP, but the power-generation company also vowed Wednesday to continue to shop around for a better price. Shares of Houston-based Dynegy rose 2 percent to $5.56 in pre-market trading.

Based on Dynegy’s 120 million shares of outstanding common stock, the Icahn Enterprises cash offer values the company at $6.6 billion."

Stocks Down Ahead of New Economic Numbers (Yahoo Finance via Reuters) worries about Europe's debt problems are setting a grim tone for Wall Street ahead of fresh readings on U.S. consumer prices and industrial production. Encouraging signs that the U.S. economic recovery is on more solid footing could sway markets for a second straight day on Wednesday. Stocks got a lift and Treasurys fell Tuesday on upbeat reports on retail sales, business inventories and wholesale prices. But the news from Europe was sobering. The ratings agency Moody's warned that it may lower Spain's credit rating."

Navel Gazing Your Neighborhood (New York Times) Check out census data on your block —presented in a neat-o visual format.