Friday, June 5, 2009

Market Reflections 6/4/2009

Improvement in the latest jobless claims report is tangible, though unfortunately precedes what are certain to be major layoffs in the auto sector. Still, the news raised hopes for improvement in tomorrow's jobs report, helping the stock market where the S&P 500 gained 1.1 percent to just over 940.

Chain-store sales reports were mostly weak though perhaps not weak enough to offset strength in vehicle sales and likely strength in sales at gas stations. Retail sales for May, which will be very closely watched following two prior months of disappointment, will be posted next Thursday.

Some call this year's strength in commodities a monetization of tangibles, reflecting doubts over the long-term value of the dollar. Commodities rebounded sharply following yesterday's sell-off, raising wide talk that investment demand, not commercial demand, is on the rise. Oil broke over $69 before ending at $68.80.

The gains in commodities underscore concerns of inflation, concerns also evident in the steepening of the Treasury yield curve where the 10-year note jumped 16 basis points to 3.70 percent vs. no change for the 2-year yield at 0.91 percent. The dollar index was slightly lower at 79.44.

Other news included the civil charges of insider trading against Angelo Mozilo, former CEO at mortgage firm Countrywide Financial that was at the center of the 2007 sub-prime meltdown.

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