North American Investment Grade CDS Index 84.50 +1.19%
European Financial Sector CDS Index 163.16 bps +1.46%
Western Europe Sovereign Debt CDS Index 199.08 bps -5.54%
Emerging Market CDS Index 201.38 +.20%
2-Year Swap Spread 23.0 unch.
TED Spread 16.0 unch.
Economic Gauges:
3-Month T-Bill Yield .14% unch.
Yield Curve 273.0 -3 bps
China Import Iron Ore Spot $176.50/Metric Tonne +.63%
Citi US Economic Surprise Index +40.20 +3.8 points
10-Year TIPS Spread 2.35% -4 bps
Overseas Futures:
Nikkei Futures: Indicating +11 open in Japan
DAX Futures: Indicating -20 open in Germany
Portfolio:
Slightly Higher: On gains in my Medical, Ag and Retail long positions
Disclosed Trades: None
Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades slightly lower, despite declining eurozone debt fears and gains in overseas equities. On the positive side, Road & Rail, Education, Hospital, Ag, HMO and I-Banking shares are especially strong, rising more than .5%. The Transports are higher on the day and (IYR) is also outperforming. Lumber is rising +1.02%. The 10-year yield is falling -6 bps to 3.3%. The Citi US Economic Surprise Index is now at the highest level since April 12th of last year. The Italy sovereign cds is falling -6.56% to 213.06 bps, the Spain sovereign cds is falling -7.75% to 306.65 bps, the Portugal sovereign cds is declining -2.9% to 498.21 bps and the Belgium sovereign cds is falling -9.54% to 208.55 bps. Moreover, the European Investment Grade CDS Index is dropping -2.46% to 87.46 bps, which is also a huge positive. The AAII % Bulls fell to 52.34 this week, while the % Bears rose to 23.44, which is a mild positive. On the negative side, Gaming, Drug, Construction, Bank, Computer, Steel and Alt Energy shares are under pressure, falling more than .75%. (XLF) has underperformed throughout the day. The UBS-Bloomberg Ag Spot Index is hitting another record high today, rising +.52%. The China sovereign cds is rising +3.63% to 77.27 bps and the US sovereign cds is climbing +4.81% to 43.44 bps. The Euro Financial Sector CDS Index is still trending higher. The Western Europe Sovereign CDS Index is still just modestly below its record high set on Monday. Today's comments from ratings firms on US sovereign debt, as munis suffer another sell-off, are likely weighing on equities. The broad market continues to trade well overall. Given the decline in the eurozone cds and stabilization in the euro currency, today's pullback looks like healthy profit-taking to me. I expect US stocks to trade modestly higher into the close from current levels on declining eurozone debt angst, short-covering and a bounce in the euro.
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