Thursday, May 24, 2012

Morning Market Analysis; the Flight To Safety

Let's start by looking at the treasury market, where we see that the entire curve is trading near or above the top of a trading range that started at the end of last summer.  This is the respective highest level for all of these sections of the curve in nearly two years.  While the MACD has given a buy sign for all the sections, I wouldn't expect too much of a rally from here, largely because treasuries are constrained by yield on the flip side.  However, the positive and rising readings from the respective CMFs tell us that money is flowing into the markets.

We see the exact same situation along all parts of the corporate curve as well; short, intermediate and long-term parts of the curve all all near two year highs, largely due to a flight to safety.

We also see the same flight to safety issues in the municipal and mortgage back bond markets.

Simply put, investors are looking to park money in interest yielding investments to ride out the storm.