Friday, May 8, 2009

Market Reflections 5/7/2009

Thursday was a wild session. Volatility and volumes were extreme, making traders, who were very busy executing orders, refer back fondly to last summer's market peaks. The only fundamentals at play are expectations that the global economy, fueled by new improvement in the U.S. and China, will emerge from recession in the months ahead.

Oil put on a show, breaking out suddenly to new 2009 highs over $58 then just as suddenly breaking back to $55 before ending at $56.50. Sidelined money from around the globe is pouring into commodities including grains and industrial metals. Sidelined money is also pouring back into the stock market which also put on a show, rising sharply at the opening before sliding to end at its lows with a 1.3% drop on the S&P 500 to 907.

It was near the close that the only economic data that moved the markets was posted -- the sharpest fall in consumer credit since early in World War II for stunning confirmation that consumers are taking cover. Chain stores, benefiting from the Easter shift, posted strong sales in April but probably no stronger than anticipated by Commerce Department adjustments.

There weren't any fireworks in the dollar which ended little changed at $1.3388 against the euro. But there was action in the Treasury market where the 30-year bond auction, due to buyer exhaustion after a week of auctions, proved a messy flop. The yield on the 30-year jumped 21 basis points to 4.29 percent.

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