Demand for Higher Return Boosts Equities
Global stock prices continued to rise overnight following a sell-off in the Dollar, signaling greater demand for higher yielding assets. The thought of a recovery in the U.S. economy is also contributing to the strength. Money is shifting out of U.S. Treasuries and into equities as end-of-the-year asset allocation continues.
Treasuries are trading lower once again as money is being shifted out of fixed income instruments and into to higher yielding assets. A weaker Dollar is also contributing to the drop in March Treasury Bonds and March Treasury Notes. Look for the T-Bonds to feel pressure as long as it remains under 115’08. Traders are also expressing concerns over the growing U.S. debt situation and the Treasury’s ability to service it.
February Gold is trading lower despite the weaker Dollar. Thin, conditions due to the shortened trading week ahead of the New Year’s holiday are helping to keep bullish traders on the sidelines. Regaining a key 50% level at $1107.40 could trigger a short-covering rally later in the day.
