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Daily Market Commentary

Bonds continue sharply higher this morning following yesterday's powerful rally.  The move really was strong, and put the relatively small drop in US equities into a much more bearish light.  I'd say that rallies like that happen about as often as Feb 29th, but just like in the equity markets, the moves are getting more volatile on the debt side.  30 year treasuries closed up 2 points yesterday and are up another point ahead of the numbers this morning.  The huge rallies and selloffs are getting more common.

 

  A decent amount of worry seems to be creeping its way back into the market, as quantified by lower treasury and Canada yields, a much higher TED spread this week and a rising VIX index.

 

PCE Index, the FOMC's preferred measure of inflation, came in just slightly higher than expectations.  Yet another inflation indicator that remains sticky on the high side.  US Personal Income and Spending also came in slightly higher than expected, adding somewhat to the price pressures.

 

Canada's Current Account balance dropped slightly to -$0.5 billion, also lower than expected.  The reaction in bonds was initially to hit the bids, but we have bounced back quickly and regained anything that was lost.

 

 

Chicago purchasing managers index will be out shortly after the market opens, expected to be just under the boom/bust line of 50.  Anyone who follows my charts will notice that of the several PMI's and business surveys of this type, two have turned decidedly negative, two are right on the neutral line, while only two are even mildly bullish (posted on ideashare last week).

 

 



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