Market Commentary

Has the risk adverse trade returned?
March 01, 2010

Has the risk adverse trade returned?  Treasury prices as measured by the 10-year rose four consecutive days, the longest win streak this year as per Bloomberg.  Weaker than estimated data, bullish comments from FRB Chairman Bernanke and good demand for the Treasury’s record $126 billion auction were the primary reason for this shallow but long advance.  Renewed concern about sovereign debt also emerged.

This coming week is highlighted by the February labor report but also due are January reports on factory orders, pending home sales, construction spending as well as personal income, consumption, consumer credit and the ISM.

Will this data follow the mode of last week’s statistics—weaker?  Or will they surprise on the upside?  I think the former, the result of the unending severe winter weather. 

There are also six Fed Bank presidents speaking.  I am relatively certain their comments will be similar to those of Chairman’s however in my view any Federal Reserve comments are significant.

If the current weakness is the result of horrific weather, will March/April data be the inverse?  Given the momentum going into the winter I think the odds suggest yes.

Markets are fascinating as they reflect all variables,..real or perceived each changing daily in their degree of significance.

Last night the foreign markets were up.  London was up 0.19%, Paris up 0.73% and Frankfurt up 1.13%.  Japan was up 0.45% and Hang Sang up 2.17%.

The Dow should open nominally higher on optimism that the ISM Manufacturing Survey will state this sector of the economy expanded for the seventh consecutive month.  Moreover sovereign debt issues are temporarily off the forefront as it appears Germany and France mayl bailout Greece.  The 10-year is off 1/32 to yield 3.62%.