The bond market is leading the way lately as all eye the 10 year bonds across all markets as they continue to drop. Falling bonds leads to a rise in yields which is dictating where we go in the equity markets.
We rallied yesterday on the DOW as a 7 year treasury auction went off without much surprise and in line with the previous 2 auctions, and gave the signal to buy again.
There is a lack of conviction in either direction with the markets right now, but with US GDP this afternoon, a shock number either way could push this market out of its range.
Euribor action has been volatile with spreads moving down near the front end of the curve, but going up at the back of the curve. This has made it hard to trade butterflies and reversion to mean trades. Long term I think these are good sells, but you may have to take some pain for it to come good.
There are alot of markets where there seems to be a disconnect between the fundamentals and the actual price. Take oil for example which is trading around 65$ a barrel. although demand is picking up, we have come a long way from its lows and some sort of correction is in order. We are up almost 65% from its lows, and I think 68 will be a sticky area, if this price holds then I see a test of 50 again.
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