Treasury notes and Elevated inflation

Treasury 10-year notes rose, erasing half of yesterday's losses, on speculation the Federal Reserve will be less aggressive in cutting interest rates and focus on inflation. The difference in yields between two- and 10-year notes narrowed for a third day as traders pared bets the Fed will reduce the target lending rate by a half-percentage point at its April 30 meeting. Policy makers cut borrowing costs less than expected yesterday, saying inflation remained ``elevated.''

Futures on the Chicago Board of Trade show 70 percent odds the Fed will cut the 2.25 percent lending target by a half- percentage point at its meeting on April 30, compared with an 88 percent chance yesterday. The rest of the bets are for a quarter-point reduction.

Gold, used to hedge against rising prices, plunged the most since June 2006, falling 4.1 percent on the New York Mercantile Exchange. Crude oil for April delivery fell $2.04, or 1.9 percent, to $107.38 a barrel. Treasuries tumbled yesterday, pushing up two-year note yields by the most since 2001, after the Fed cut the target lending rate by three-quarters of a percentage point to 2.25 percent and said measures of inflation are ``elevated.''

SP 500 daily March 19

After the Fed. Market has been hit with Hammer of money.

Oil will fall a bit, gold will retrace down and we will consolidate here while the bear re assess where the next financial crisis will occur.

Bank One, Discover, and American Express are writing off debt at a faster rate than ever before. Consumer credit is going to take it on the head.

Pre Fed Gap up 20 points

Well we have a 20 point gap up before the open. Fed meeting at 2:00.

The roller coaster will be leaving the station soon.

We have had some prettty large volume going through these past days and today could be the same.

We have some price divergence on the RSI.

Close the gap, rally big off the rate cut news and wathc the US currency dive.

Lehmans next with $5 a gallon soon

Well Bear Stearns was saved, Lehmans lost 25% of their value in one day and gasoline could be $5.00 a gallon before labor day.

Seems like this could be a long hot summer.

Some are calling this a bottom. Looks to me like we have been thrown a rope, to hang on to be hanged on. We shall see

Gold hit $1,033, Oil $112 Dollar dives

The Fed announced two initiatives designed to bolster market liquidity and promote orderly market functioning, and approved the JP Morgan - Bear Stearns deal. First, they authorized the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets.

It is available today, and will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities.

Second, the Federal Reserve Board decreased the primary credit rate ("Discount Rate") from 3.5% to 3.25%. Lastly, the Board also approved the financing arrangement announced by JPMorgan Chase and Bear Stearns where Bear is being purchased for 1% of its value only 16 days ago! Tomorrow, the FOMC will meet, and obviously the odds that the Fed will cut the Fed Funds rate by 1.0% have increased. Mortgage prices are really a mixed bag ("where should they be priced?") with the 10-yr down to 3.41% currently.

SP 500 Head and Shoulders March 17

Daily SP 500 March 16 after Fed

Watch out, today could be the next Black Monday.

This has some support but would it hold. Heard a very interesting conversation that Since the Fed has made funds available to the trading houses that they are shorting their own stocks.

Good to know they can borrow the money to short their own stocks considering how poorly they are doing with the Sub prime.