6/4/09

Good morning. Mortgage backed securities (MBS) prices are lower (rates higher) in another volatile trading session, after a government report showed the number of people collecting unemployment insurance declined for the first time in five months: Bonds also opened lower, in anticipation of a massive Treasury auction expected next week. However, moments ago, we received some good news when the Treasury Department announced that it is scaling back its auction because it was weighing heavily on the Bond market and the US Dollar. In other news, Initial Jobless Claims, which is a leading indicator of the health of the jobs market, was reported inline with expectations.
Overall, Stocks opened a bit higher this morning, but there are several technical signals that suggest weakness ahead. Additionally, Stocks could be exacerbated by the tomorrow's Jobs Report, which is expected to be negative. Therefore, I recommend floating for now and will continue to monitor the situation and keep you posted