Tuesday, December 28, 2010

Mixed markets on thin trading

Dow rose 20 from late day buying, decliners slightly ahead of advancers & NAZ fell 4.  Chevron (CVX) & Exxon Mobil (XOM) led the Dow higher with oil trading above $91.  Bank stocks, like the rest of the markets, were just marking time.


Value215.71One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change  0.06  (0.0%)

The MLP index rose 2½ to the 359s on late day buying.  The REIT index was up a ½ in the 215s, near the upper end of its trading range for the latter part of the year.  Junk bond funds were lower, following the sell off in Treasuries (discussed below).. 

Alerian MLP Index   ---   1 year

Dow Jones REIT Index   ---   1 year

10-Year Treasury Yield Index   ---   1 year

Oil traded near a 26 month high after a report showed US retailers had their best holiday sales in 5 years & crude supplies were forecast to extend their biggest monthly decline since Dec 2006.  Cold weather in the north increases demand for oil & gas.  Gold rose the most in 7 weeks on speculation that Europe’s debt crisis will spread, boosting demand for the precious metal as a haven asset.

CLG11.NYM...Crude Oil Feb 11...91.30 ......Up 0.30  (0.3%)

GCZ10.CMX...Gold Dec 10.....1,406.30 ...Up 23.90  (1.7%)

$$$ Gold Super Cycle $$$  

Treasuries slid after a $35B auction of 5 year securities attracted the lowest demand in 6 months. The 10-year yield rose a very big 13 basis points to 3.48%.  Treasuries extended losses after the auction drew a yield of 2.149% & the bid-to-cover ratio was 2.61X, the lowest since Jun. US debt due in more than a year is headed for the biggest monthly loss in global gov bond markets amid signs that the economy is strengthening, reducing demand for investments viewed as less risky.  The 2 year Treasury yield shot up 7 basis points to 0.75% & the yield on the existing 5 year note increased 13 basis points to 2.15%.  Among other factors were higher oil prices (at their highest levels in more than 2 years).

Treasuries Drop After $35 Billion Auction as Stocks Advance

Treasury yields:

U.S. 3-month
U.S. 2-year
U.S. 10-year

Enbrdige Energy (EEP), a major MLP, shut its Spearhead crude oil pipeline early today because of maintenance. The Spearhead line, which mostly transports heavy Canadian oil in the central US, is expected to return to service late today. EEP said earlier that the line will carry 174K barrels a day in Jan, about 20% of the shipment requests for the month. The Spearhead line spans 657 miles (1,058 kilometers) from Chicago to Cushing, Oklahoma.  This was reported as coming from Enbridge, Inc (ENB), the Canadian General Partner for EEP, but EEP operates the pipeline.  This pipeline was restarted 2 weeks ago after fixing problems with the pipeline in the last few months.  EEP was up 49¢ but has plateaued in recent months.

Enbridge Spearhead Pipe Shut Due to Line 61 Repairsat Bloomberg

Enbridge Energy  ---   1 year

The Shanghai Composite Index slid to a 3 month low on concern over higher Chinese interest rates.  When traders return next week, that might affect US markets.  Weaker demand for Treasuries at auction caused rates to shoot up today, not good going forward.  Gold is within 2% of its record, reached at the start of Dec, on increased worries over European sovereign debts.  Trading was slooooow, there's no other way to describe it when the NYSE floor volume is ½B shares.  The rest of the week could be even slower.

Dow Jones Industrials   ---   1 year

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