Appetite for Risk Driving U.S. Equity Markets Higher, T-Bonds Lower
At least for the time being, investor appetite for risk seems to be stronger than the desire for safety, driving up U.S. equity markets ahead of the opening. This morning’s possible rally was tipped off yesterday when all three major futures indices posted daily closing price reversal bottoms.
T-Bonds and Gold Signal Impending Stock Market Break
Treasury futures rallied in flight-to-safety buying as yields in the 30-Year Bonds and 10-Year Notes plunged. Expectations are the Fed is likely to keep interest rates down for a prolonged period of time. Despite the early recovery in the equity markets, the Treasurys held their ground, suggesting that there is real concern about the condition of the economy.
Fed Announcement Dampens Stock Rally Efforts, T-Bonds March On
U.S. equity markets closed lower but held onto the low posted earlier in the day after the Federal Reserve said the economy was “proceeding” rather than strengthening like it had said in its last report in April. This change in language helped pressure the stock market but failed to trigger an all out selling frenzy.
Low Interest Rates; Global Recovery Fears Driving T-Bonds Higher
Flight-to-safety buying is driving June Treasury Bonds sharply higher. Thursday trading action took out the recent high at 124’16. Upside momentum seemed to be indicating that another surge was likely. The move in the T-Bonds looks more reactionary than speculative with investors taking their cues from the falling equity markets.