The market spent most of the session near the unchanged level before moving sharply higher during the final 30 minutes of the trading. By close, all three major indexes were up by more than 1%, enough to draw a strong close for the month. In May, the S&P 500 rose 5.3% and the Dow gained 4.1%, making it the third straight monthly gain. However, the biggest winners for the month are really from commodities. The CRB commodity index finished the month with a gain of more than 14%. Part of that gain can be attributed to a weak dollar, which lost over 6% during the same period. But more important, investors seem to believe that although most of the developed countries are still in deep recession; growth has started to emerge in other parts of the world, especially in the so-called “BRIC” countries. And this can be seen from a sharp divergence of two closely related commodities’ prices. Natural gas, which cannot be easily transported across countries, is down 36% year-to-date in the US due to lack of industrial demand. Crude oil, which can be shipped around the world, is up over 40% year-to-date.

Let’s take a look at the three key indicators: 1. VIX: closed at 28.92 compared to 31.67 yesterday; 2. The euro/yen cross: closed at 135 compared to 135 yesterday; 3. The TED spread: closed at 53 bps compared to 54 bps yesterday.

All major sectors finished the session higher led by transportation and basic materials. The CRB commodity index climbed 1.3%. The US dollar was lower against most major currencies. Treasuries were higher. The three-month US LIBOR dropped 1bps to 67 bps. The VIX index declined over 2 points. The market breath was positive on both NYSE and Nasdaq. The volume was heavier compared to the previous session.

The market rebounded today after yesterday’s sharp sell off. For the second session in a row, the equity market was driven by actions in the treasury market. The major indexes moved decisively higher following a sound auction of 7-year T-note. In the next few months, stock market participants will for sure pay more attention to the bond market as the Treasury Department continues to auction a record amount of new treasuries. After today’s rally, the S&P 500 is back to the upper-half of the range between 870 and 930. It has been hovering around the range for most of the past month. Unless the economic data come better than expected, it is very likely that the current seesaw pattern will continue for a while. In terms of economic news, most data for today’s session were in-line with the expectation. Durable goods orders were better than expected but the previous month’s number was revised markedly lower. Weekly jobless claims also were in-line with expectation while new home sales show smaller-than-expected increase.

Let’s take a look at the three key indicators: 1. VIX: closed at 31.67 compared to 32.36 yesterday; 2. The euro/yen cross: closed at 135 compared to 132 yesterday; 3. The TED spread: closed at 54 bps compared to 51 bps yesterday.

Most major sectors finished the session higher led by energy and basic materials. The CRB commodity index climbed 1.4%. The US dollar was lower against most major currencies. Treasuries were higher. The three-month US LIBOR was little changed at 67 bps. The VIX index was little changed. The market breath was positive on both NYSE and Nasdaq. The volume was heavier compared to the previous session.

The market retreated sharply today amid concerns over rising 10-year yields. By close, both the Dow and the S&P 500 were lower by around 2%, essentially giving back a good portion of yesterday’s gain. The rise in the yields of 10-year treasury also brings the spread between the 2-year notes and 10-year notes to 275 bps, the highest on record. So what should we read from the rising yield in 10-year T-notes? Everything has two sides and it is no different in this case. On the negative side, the yields on 10-year T-notes serve as benchmark rates for many products, including the prime rates for corporations and consumers. If the yields continue to rise sharply from where it closes today, the economic recovery could be in jeopardy. On the other hand, we should remember that a widening spread between short-term Fed fund rates (which stand between 0% and 0.25% now) and long-term treasury yields is extremely beneficial to financial institutions. In fact, I think one of the main reasons that many banks sought to take those risky bets on CDS and CDOs related to housing market back in 2006 was the negative sloped yield curve at that time, which made banks very difficult to maintain profit margins and forced them to use creative ways to generate extra profits. We should also remember that despite a sharp increase in the 10-year yields since the beginning of the month, today’s yields are still low by historical standards. One year ago, the yields on 10-year were around 4% while two years ago, the yields were around 5%. Also, today’s rise in 10-year yields didn’t incur similar increases in other yields. The yields on 10-year A rated corporate bonds actually fell 24 bps to 5.99% and the yields on high yield bonds also fell slightly. And that suggests today’s rise in the 10-year yields may be related to program trading and hedging related activities. We suggested at the end of 2008 that a big bubble was forming in treasuries as money tried to find the safest place to hide at that time. So far this year, the 10-year T-notes have lost 8.7% while 30-year bonds have lost 25.5%. The bubble actually got burst faster than we had expected.

Let’s take a look at the three key indicators: 1. VIX: closed at 32.36 compared to 30.8 yesterday; 2. The euro/yen cross: closed at 132 compared to 133 yesterday; 3. The TED spread: closed at 51 bps compared to 50 bps yesterday.

All 10 major sectors finished the session lower led by financial and transportation. The CRB commodity index climbed 0.4%. The US dollar was higher changed against most major currencies. Treasuries were lower with the yield curve sharply steepened. The three-month US LIBOR rose for a second session to 67 bps. The VIX index rose 1.5 points. The market breath was negative on both NYSE and Nasdaq. The volume continues to be on the light side.

The market started the new week on a strong note. By close, all three major indexes were up more than 2%. The S&P 500 is also back to the upper-half of the trading range between 870 and 930, which has existed since the start of May.  An unexpected surge in consumer confidence was the main reason behind today’s move. The consumer confidence index had its biggest jump in six years to 54.9 from 40.8 the month before. As consumer spending accounts for more than two thirds of the GDP, economists pay close look at changes in the consumer sentiment. However, it should be noted the link between consumer confidence and consumer spending is quite fragile and usually market participants don’t care too much about it. Today’s rally came despite some negative developments in housing and auto. The S&P/Case-Shiller Home Price index for March dropped 18.7%, a little more than what the market had expected. General Motors failed to persuade enough bondholders to accept a debt-for-equity swap and it seems at this point that a bankruptcy filing by the company is inevitable. And that may happen as soon as tomorrow. As we are entering the summer season, trading activities are going to become slow as many traders start to take vacations. Despite today’s sharp rally, the volume came on the light side.

Let’s take a look at the three key indicators: 1. VIX: closed at 30.80 compared to 32.63 last Friday; 2. The euro/yen cross: closed at 133 compared to 133 yesterday; 3. The TED spread: closed at 50 bps compared to 49 bps last Friday.

All 10 major sectors finished the session higher led by financial and consumer cyclical. The CRB commodity index climbed 0.6%. The US dollar was little changed against most major currencies. Treasuries were lower. The three-month US LIBOR was little changed at 66 bps. The VIX index declined 2 points. The market breath was positive on both NYSE and Nasdaq. The volume was on the light side.

Market is closed due to U.S. holiday.