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Daily Market Commentary

Here we go, some real data to work with.  On top of that Bernanke out confusing the market a little bit with comments at odds with the Fed statement released after the FOMC meeting last week.  Inflation is still their concern.  Well of course it is, the Fed is only concerned about the Economy and Inflation... their job is to balance the two, so they will naturally be focused on one or the other.  Currently, inflation is remaining stubbornly high thanks to high commodity prices (contrast to dropping prices in almost everything else), so the Fed will focus on it.


US GDP for Q4 was stronger than expected, but this number is lagging - we'd rather know what's going to happen than what happened 3 months ago.


GDP personal consumption index also remained strong, although the core ticked down slightly.  All in all, the bond market remained mostly uninterested.  Yields are very slightly higher this morning than yesterday.


Strategy is still unchanged here, the two year is the place to be, as we feel the yield curve will continue to steepen as the short end drops more in yield relative to the long end, despite what Bernanke has to say about continuing to fight inflation.


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