Stampede
Hey everybody…Europe is back in the headlines! I never thought I’d say it…but I miss the days when all of the news out of Europe was about the royal wedding. As new concerns arise over sovereign debt in Europe we have yet another flight to quality. The 10-year Treasury is up over a point to trade at a 2.03% and the Down Jones (yeah…I know how I spelled that) is off 350 points to trade at 11,063.
Other news this morning was that Initial Jobless Claims posted 408,000 new claims vs. an expectation of 400,000. CPI was a bit higher than expected but that is being discounted completely amid this stampede to safety.
Even the records are setting records
The 5-year Treasury set another record low today of 86 basis points…but before I could type that it went down again and hit another new record low of 83 basis points…I’d better quit typing.
Gold hit another record high and oil is down to $83 a barrel. This is the markets way of preparing for a global slowdown.
From the “interesting timing” section
Two weeks after S&P downgraded US debt, news is hitting the headlines that the US Justice Department announced that they are investigating S&P. I have a friend at a bank in Florida who asked me right after the downgrade “what do you think S&P will look like a year from now?” At the time I didn’t understand the question…now I do. Payback can be rough.
Surprise at the end
As I wrap this up I just got the Philly Fed index release. This index tracks manufacturing trends in the Philadelphia Federal Reserve district. A positive number indicates expansion in manufacturing, a negative release indicates contraction. The expectation was for a positive 2.0 level which would indicate a very modest expansion. The actual release that got posted this morning was a negative 30.7. I don’t know that words can adequately express the magnitude of the index missing the mark by that much. Sound effects might be more descriptive. When that number was released I pointed it out to the rest of my office and the collective gasping/groaning that commenced made it sound like everyone in the office had been punched in the stomach at the same time.
The market, which was already it full-bore rally mode, drove prices even higher and pushed the 10-year yield down to a 1.99%...which may also be a new record…but I’ll have to research that.
The Dow is now off 500 points to trade at 10,900. Just when I was hoping that this would be a less volatile week the captain turns on the seat-belt sign and asks us to not move around the cabin…the turbulence looks likely to continue.
If you have any questions or if there is anything I can be doing for you just let me know.
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