U.S. stock indices had enough information in today’s bullish GDP report to mount a strong rally, but concerns about the debt crisis in Greece and a poor outlook for technology stocks led to a late session sell-off.
If the situation in the Euro Zone continues to escalate and capture the bulk of the headlines, then look for investors to turn more risk averse. This will underpin the Dollar but pressure stock indices and gold.
The robust GDP report should have pressured the March Treasury Bonds, but traders didn’t bite on the move, choosing instead to take safe positions. This market closed above a key 50% level at 118’24, putting it in a strong position to rally further to the .618 retracement level at 119’24. A flight to quality rally is likely to get triggered if concerns about Greece’s ability to cover its debt escalate.