Mel's Blog

Like Rock-a-Bye Baby, Bonds are falling after the break beneath the floor of support, cradle and all.  The Bond has only made a decisive cross over the 200-day Moving Average on three seperate occasions in the past three years.  This tells us that, barring a timely reversal, we are likely seeing a shift in the market towards higher interest rates.  

In today's news, Gross Domestic Product (GDP) grew at an upwardly revised 0.9% in the first quarter, slightly better than the 0.6% estimate because of lower demand for foreign goods and services, and a rise in investment in non-residential structures.  Additionally, weekly Initial Jobless Claims were reported at 372,000, a little higher than consensus estimates of 370,000 claims.  The four-week moving average for Initial Claims declined by 2,500 to 370,500.  The four-week moving average of Continuing Claims rose to 3.06 Million, their highest level since February 2004.  The job market is somewhat soft, but still somewhat stable.   

The Treasury will auction off $19 Billion in 5-year Notes at 1:00pm ET.  Yesterday's 2-year Note auction wasn't received well by investors and was part of the reason for Bonds moving lower.  Today's auction, if also not well received, could once again apply some selling pressure to the overall Bond Market.  

At 2:30pm ET, Fed Chairman Ben Bernanke is scheduled to speak about liquidity provisions at a risk transfer mechanism conference in Basel, Switzerland.  This speech could potentially move the markets.