D&D Note (5-30-2012)
The more bonds people buy the lower the yield goes. (price and yields are inverse). Today we hit record low yields on the 10-Year Note with a yield of 1.62%. So low that you are loosing your investment. All signs point to we are about to see a bond bubble burst. There still might be one more leg down but the hissing sound you hear behind you is the air coming out of the bubble.
High correlation was seen across equities with all lot of red on the screen. The Ol’ General took the reigns today bucking the trend and Apple (AAPL) pushed ahead to finish in the green closing at $579.17 a share.
Greece is looking more and more like just a dress rehearsal before the main act of Spain slipping out of the Euro. If Spain falls out, look out Italia. Then Portugal. literally dominos. Currently Spanish 10-year yields are at 6.6%.
That is unless Germany can find it in its das Herz to backstop the PIIGS… While Chancellor Angela Merkel might be loosing seats in her region, the next Federal election of the Bundestag won’t be until between September 1 and October 27 of 2013. So her position as head of the Nation won’t be compromised anytime soon.
The DOW (INDU) finished down 161 points, the S&P 500 (SPX) was lower 19 points, and the Nasdaq (COMP) was down 34 points.
Clearly we had some profit taking after yesterdays dead cat bounce rally.
Economists are forecasting 150,000 jobs where added in May and the unemployment rate remains at 8.1%. The actual report comes out Friday at 8:30 eastern time.
Oil declined $2.94 to close at $87.82 a barrel. next leg down should put it around $85 a barrel.
Gold followed treasuries as a safe haven rising $14.70 to end at $1,563.40. Gold needs to close above $1,609 to return to its bull market trajectory.
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