North American Investment Grade CDS Index 90.0 bps +2.26%
European Financial Sector CDS Index 135.28 bps +5.82%
Western Europe Sovereign Debt CDS Index 178.17 bps -1.29%
Emerging Market CDS Index 211.88 bps +.78%
2-Year Swap Spread 20.0 -1 bp
TED Spread 17.0 unch.
Economic Gauges:
3-Month T-Bill Yield .14% +1 bp
Yield Curve 263.0 +1 bps
China Import Iron Ore Spot $165.0/Metric Tonne +.18%
Citi US Economic Surprise Index -14.10 unch.
10-Year TIPS Spread 2.20% -5 bps
Overseas Futures:
Nikkei Futures: Indicating +38 open in Japan
DAX Futures: Indicating +9 open in Germany
Portfolio:
Slightly Higher: On gains in my Biotech, Medical and Technology long positions
Disclosed Trades: None
Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite soaring long-term rates, recent gains, China inflation worries and US municipal debt concerns. On the positive side, Education, Insurance, Hospital and Bank shares are especially strong, rising more than 1.0%. (XLF) has traded well throughout the day. Copper is rising +1.27% and Lumber is gaining +2.89% despite more euro weakness. The Italy sovereign cds is falling -3.81% to 194.40 bps. Gold is falling -1.11%. On the negative side, Airline, Road & Rail, Gaming, Restaurant, REIT, Homebuilding, Steel, Gold, Ag, Coal, Oil Tanker and Paper shares are under pressure, falling more than 1.0%. (IYR) has been heavy throughout the day. Cyclicals and small-caps are underperforming. The Greece sovereign cds is jumping +3.41% to 940.47 bps, the China sovereign cds is surging +5.51% to 74.19 bps and the Japan sovereign cds is rising +3.33% to 70.21 bps. The European Financial Sector CDS Index is beginning to trend higher again. Moreover, the US Muni CDS Index is rising +4.34% to 199.50 bps. The 10-year yield is soaring another +11 bps to 3.24%. The Citi Asia Pacific Economic Surprise Index is falling to another 52-week low today to -10.0. It is now at the lowest level since May 2009. Some key investor sentiment gauges remain a bit too bullish. The 10-year yield is mostly jumping on rising economic growth and inflation expectations, not on deficit worries, in my opinion. The US sovereign cds is flat over the last 5 days. Despite a number of potential negative equity catalysts, the bears remain unable to gain any traction, which is a big positive. I expect US stocks to trade mixed-to-lower into the close from current levels on soaring long-term rates, profit-taking, China inflation fears, US municipal debt concerns and technical selling,
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