Banks lead stocks lower into the close

Dow sank 83, advancers were over decliners by only 20% (the advantage had been over 2-1 for much of the day) & NAZ rose 2. Selling in the last ½ hour took Dow down to 7886, closing at the lows. Banks have been leaders on the way up & were leaders in PM selling.


S&P 500 FINANCIALS INDEX

Value 137.51

Change 5.46

% Change 3.8%

Indecision left high yield securities little changed. The Alerian MLP Index was down fractionally while Dow Jones Index fell 5.

The benchmark Treasury 10 year bond yield reached the highest level, 2.96%, since the FED said it would buy Treasuries. That means Treasury bond prices are at the lowest prices over the period. Bond holders are selling more than the Treasury is buying. China is the biggest holder of Treasury debt. We learned they have been selling longer term maturities in favor of short term debt. The 90 day Treasury bill yields only 11 basis points (annualized).

•Treasury 10-Year Yield Reaches Highest Level Since Fed Announced Buybacks


General Motors (GM) won't make their critical interest payment on June 1. Instead they hope that a successful bond exchange next month (prior to the deadline) will be an essential element for their out-of-court restructuring efforts. The clock keeps ticking.

•GM Plans Debt Exchange Prior to June 1 Bond Payment as Carmaker Seeks Aid


Stocks are drifting. At least the Dow is drifting sideways, not down. The talk about the first contraction in the global economy since WW II is not sitting well with investors. The 8K ceiling has been holding even after the breach last week.


Dow Jones Industrials --- 2 weeks