DIA -.10%, QQQQ, +.45%, SPY+.07%
10 Year Treasury. +4/32, yielding 4.09%
The markets traded in split manner today. Nasdaq increased thanks to Apple's annoucement it would split its shares 2-1 and Verizon's deal to purchase MCI. However, Elliot Spitzer's (my favorite Democrat by far) serving of a subpoena on AIG Insurance negatively impacted the DOW. However, the markets are awaiting the Greenspan testimony later this week as well as some economic numbers due at the same time. Of the ETFs I watch, Broadband Internet and Wireless all increased, while traders of Oil services and Industrial ETFs took some profits today.
The 10-year Treasury rose 4/32 to yield 4.09%. The 2-year sold off by 2/32, so the yield curve continues to flatten. Essentially, a flatter yield curve reflects the feeling that short-term rates will continue to increase, while the long-end of the curve will benefit from lower inflation. There was an article in Baron's this week mentioning the increased purchases of longer-term government debt by pension funds. New regulations on the pension funds method of computing liabilities is causing these purchases. There is also a feeling that inflation is under control, making the long-end of the Treasury market more attractive.
The Euro rose .30% verses the Dollar and the Yen rose .17% verses the dollar. Japan announced a trade surplus of 35 billion, which highlighted the US current account deficit. However, the market is waiting for Greenspan's testimony before congress on Wednesday and Thursday of this week to see what his opinion is of the Bush budget. Although the dollar rallied verses the Euro at the beginning of the year, there is a growing sentiment the rally has ended. In addition, there is also speculation the Greenspan's statements from the G7 conference were nothing more then a political ploy to ease the downward pressure on the dollar. Looking at the Yen/dollar chart, the market is still in a 102-106 range, indicating the market is still looking for firm direction.
Oil rose slightly today, closing at $47.46/bbl. There is growing speculation that OPEC will cut production soon as the US winter comes to and end. This sentiment is in direct contradiction with OPEC's statement at its winter meeting they would not cut production at least until their Spring meeting.