Traders looking for
increased risk are driving equity markets higher at the mid-session,
but the rally has stalled and the indices appear to be churning. The
June E-mini S&P 500 has exceeded a normal retracement after the
recent break, but the slow down in momentum may be an indication that
prices are too high to chase.
Goldman Sachs fraud tension has
eased but Greece continues to remain a concern. Traders are being
cautious in case the SEC announces more litigation. Risk sentiment
could turn bearish quickly at current levels so traders should watch
the action carefully during the last hour of trading.
Treasury Bonds and Treasury Notes are trading basically flat today.
Traders are watching developments in the stock market for direction. A
sharp sell-off in the equities will most likely trigger a strong rally
in the Treasuries but gains will be limited because of the increased
June Gold is up today because of greater demand for risk
and the mixed U.S. Dollar. June Crude Oil is trading higher because of
oversold conditions and signs of a global economic recovery. News that
air traffic has resumed in parts of Europe is helping to underpin crude
oil because of increased demand for jet fuel.
The U.S. Dollar is
trading mixed at the mid-session, posting gains versus the Euro, Swiss,
and Japanese Yen while struggling against the British Pound, Canadian
Dollar and Australian Dollar.
The June Euro remains under
pressure on concerns the recently approved European Union rescue
package will not be enough to stem the financial slide in Greece.
Borrowing costs continue to plague Greece with the cost of debt eating
up much of its cash flow. The spread between Greek Bonds and German
Bunds remains wide indicating that investors believe an investment in
Greece is a high risk proposition.
The June British Pound surged
to the upside this morning following the release of better than
expected Consumer Price data. Today‚Äôs figure sends a signal that the
Bank of England is likely going to pass on an increase in its
quantitative easing program at its next meeting in May. The increase in
inflation came as a surprise to the central bank as well as market
participants because the BoE has been warning about the possibility of
deflation. Gains are most likely being limited today by election
concerns. Many traders feel this market is not likely to trend until
after the May 6th election. Furthermore, traders are still worried the
election will result in a hung parliament which will make it difficult
to pass legislation to curb the wide U.K. budget deficit.
demand for higher risk assets is helping to drive the June Japanese Yen
lower. Signs that the global economic recovery is back on track is
leading investors to take on more risky assets like gold, crude oil and
The Bank of Canada voted this morning to leave interest
rates at 0.25% but strongly hinted that interest rates would increase
sooner than expected because of the strong economic growth and the fear
of inflation. For over a year, the BoC has indicated that rates would
remain low until at least July 1. Today‚Äôs policy statement indicates
that June 1 is likely the date rates will begin to rise.
weaker Euro is leading to a weaker June Swiss Franc. Traders are
anticipating more intervention by the Swiss National Bank in an effort
to protect the currency and the Swiss export market.