Nasdaq --- YTD
Banks joined in the rally, although the Financial Index is still near the low end of its 5 month trading range:
S&P 500 FINANCIALS INDEX
| Value 193.81 | Change 2.44 | % Change 1.3% |
The odd behavior of the MLP index can be explained. They had a rebalancing problem when they took K-Sea Transportation Partners (KSP) out of the index & replaced it with Holly Energy Partners (HEP). However, the Yahoo finance widget on the right shows that MLPs are doing just fine thank you. The index still has its 100 point gain for the year. The Dow Jones REIT Index is rising again, taking it near the 281 peak reached earlier this year. Junk bonds are higher as risk is welcome & being rewarded. Treasuries are weak, leading to higher yields (see below).
Alerian MLP Index --- 2 weeks
Dow Jones REIT Index --- 2 weeks
Oil prices shot up to 74 ahead of the OPEC meeting where the cartel is expected to keep production levels unchanged. Gold is still groping trying to find a new floor from which to rally.
| CLF10.NYM | ...Crude Oil Jan 10 | ...74.20 | ... 0.88 .......(1.2%) |
| GCZ09.CMX | ...Gold Dec 09 | ...1,107.40 | ... 3.40 .......(0.3%) |
GLD (ETF) --- 2 weeks
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The yield spread between 2- & 10- year Treasury notes widened to a record. Investors are betting an accelerating economic recovery will fuel inflation, thereby reduce demand for gov debt with the US borrowing record amounts. The yield curve touched 281 basis points ahead of the Treasury announcement on Dec 23 about how much it plans to auction in 2-, 5- & 7-year notes next week. The spread has doubled, starting 2009 with a 145 basis point spread. There is nervousness that year end auctions will not go well, a negative signal for the start for a new year when the gov will have to borrow over $1T at new auctions. The 2-year note is yielding 0.83% while the 10-year bond yield is 3.63% & may be heading for 4% reached earlier this year.
| 2-Year | 0.750 | 11/30/2011 | 99-27 / .83 |
| 10-Year | 3.375 | 11/15/2019 | 97-27+ / 3.63 |
•Treasury Yield Curve Steepens to Record on Outlook for Economic Recovery
Caution is being thrown to the wind going into the last 2 weeks of what has to be the best year in the history of the stock markets. A strong economic rebound is expected to solve problems. I went into a local Best Buy yesterday, their business looked to be very, very slow, but maybe the remaining days this week will be much better. Massive gov borrowing which will be aggravated if the new health care plan goes is approved, dreary unemployment numbers & soft consumer sales (especially in housing & auto) drone on. But it looks like the markets want to finish with a year-end rally.
Dow Jones Industrials --- 2 weeks
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