Recap Of Previous Session

  • Very Stable, Very Nice Friday Rally took us nearly as high as we've been since Black Wednesday
  • Stocks gained as well (only slightly) following better than expected GDP
  • Disconnect between stocks and bonds explained here

The Session So Far

  • Strong manufacturing report in China and better than expected bank earnings in Europe (Barclays and HSBC)  lead equities higher overnight
  • Beginning of month portfolio re-allocations unfriendly to tsy's as cash goes to work in stocks
  • High Volatility this AM
  • 10 yr TSY 24/32 lower in price, yielding 3.57. 
  • yield curve flattening momentum may be nearing exhaustion for now

All of the above, Plain and Simple:

  • First of all, hope you were tuned in last week. 
  • Losses so far this AM should stay below .375 on average
  • Over par = par-nertia = lock predisposition generally rewarded in the long-view
  • Only dipped to 100-08 so far this AM, so STILL vulnerable to 100-00's gravitational pull

Other Important Stuff

MBS, Tsy, and LIBOR Quotes