Market Analysis

Stocks are down this morning and US Treasury Notes are slightly improved but mortgage bonds are flat.  Yesterday mortgage bonds moved closer to breakeven after opening stronger.  With bond prices as high as they currently are, bond investors have a tough decision.   Sell now and take profits (which, in mass would put upward pressure on rates).  Wait and risk it? Also, the question then arises what to do with cash from the sale.  Is it getting safer to bet that Europe's problems were overblown?  In Europe there are better yields and the upside of currency appreciation if the Euro recovers.  All of these factors and the trajectory of the equity markets are swirling around bonds these days.

In economic news, Initial Jobless Claims for the week ended 6/19/10 came in at 457,000 a slightly lower amount than the 460,000 projected.  Continuing Jobless Claims for the week ended 6/12/10 came in at 4.548 millioin which was lower than the 4.580 expected.  Durable Goods Orders for May came in down 1.1% which was better than the 1.3% decline analysts had been expecting.  Excluding the transportation component, Durable Goods Orders were up .9% which was slightly worse than the expected increase of 1.3%.