Monday Market Recap

Somewhat mixed day in the capital markets today.  Here is some data and thoughts:

Equities:

Equities tried to rally throughout the day, but just couldn't pull it off.  Financials got whacked as news of a breakdown in the MTD/STD merger hit the tape, European banks got hit (yep, another day in Ireland), and Citi found out the government might not be out by the end of the year.  Telecom and utilities pulled off positive performance due to the perceived safety of the sectors.

Like it or not, the near term trend continues to be up.  Tactical overweight.

Growth stocks continued to diverge from value as investors continued to jump on the equity gravy train.

Growth is where you want to focus a tactical overweight in equities.


Fixed Income:

Secondary IG market volume was low today compared to recent days and advancers outnumbered decliners 1.65x.  In the HY market, advancers outnumbered decliners 1.3x.

$13.5B priced new issue today, with notables being NBCU with $4.1B and Santander with $1.1B.

The yield curve steepened as 7s and 10s rose more than 30yr bonds.  Despite all the talk about "bond bubbles", I believe that treasuries still have some upside from here as there is a price insensitive buyer (I have heard instead of cash tax refunds, we could be getting treasuries).  Treasuries rallied on the back of a record setting 2yr auction.




Currencies:

Dollar continues to get beaten on as participants speculate that QE2 (or whatever the heck they will call it) is on the way, and rates in the US aren't attractive relative to most other currencies.







Bottom line today:  mixed on risk, still strong demand for govvies and credit and resistance against the leper formerly known as the dollar.