treasuries fall inflation increases oil going up

Treasuries fell a second straight day as wholesale prices rose at almost double the pace forecast and New York manufacturing unexpectedly grew, fanning concern that inflation will quicken. Demand increased for inflation-linked Treasuries after the reports as investors sought protection from the risk that six Federal Reserve interest-rate cuts since September will fuel economic growth. Crude oil set a record high today. The price report is a wake-up call that's there is still inflation pressure.

Crude oil climbed above $113 a barrel, the highest since futures began trading in 1983, on supply disruptions in Nigeria and Mexico.

Inflation expectations increased a fourth straight day, Treasury yields indicate. Given what inflation is doing, it makes it more difficult for the Fed'' to lower rates or increase cash in the banking system.

SP 500 daily April 15

If we consolidate then retrace to 50-60 and put in a lower high, we could see our next swing low come.

Grains and Food around the world

Thailand and India (the number 1 and 2 rice exporters in the world) have banned most rice exports

China and Vietnam have implemented food export controls

Rice prices have soared by up to 70% in world markets

Philippines must now import rice to feed its growing population

The Wall Street Journal recently reported the worst case of food inflation in the US in 17 years

There have been food riots in Mexico City, food strikes in Italy, and violent protests in many areas of Africa, South America, and Haiti

UN representatives are encouraging the EU to relax their opposition to genetically modified foods

Millions of people in the emerging middle class of China and other Asian nations are demanding more meat in their diets, as they associate meat-eating with prosperity

Grains are experiencing record demand for use as animal feedstock

In the United States this year, nearly a third of the corn output will be used to make an estimated 9.3 billion gallons of ethanol (a lower priced oil alternative)

GE leads the market down fed had 6 rate cuts

Treasuries rose, heading for a weekly gain, after General Electric Co. reported its first quarterly drop in profit since 2003 and U.S. consumer confidence slumped to the lowest in 26 years. The Treasury market has priced in a recession and very weak economic data, if things get worse, we're going to see another leg down in interest rates.

U.S. stocks fell after GE, based in Fairfield, Connecticut, said first-quarter earnings slumped 12 percent because of an inability to sell some assets and higher-than-forecast losses at its finance businesses. The Standard & Poor's 500 index fell 1 percent, the most in two weeks.

Traders increased bets the Fed will add to its six rate cuts since September to bolster economic growth, futures on the Chicago Board of Trade show. Traders see a 52 percent chance the Fed will lower its rate for overnight lending between banks by a half-point to 1.75 percent on April 30. The likelihood of a cut that big hasn't been above 50 percent since March 31. Futures also indicate a 21 percent chance the Fed will lower the rate to 1.5 percent by June.

SP 500 daily How many more days of consolidation

Where is this one going? Waiting for the next bad news to hit.

Commercial real estate will be the next wave of write offs. Seems like their is misdirection from the bonds market.

what is another 6-6.5 billion

According to CNBC, Merrill Lynch is likely to post a first-quarter loss on further writedowns of between $6 billion and $6.5 billion, according to senior executives at the company.

Unlike earlier writedowns at Merrill (NYSE: mer) and other Wall Street investment banks, the latest round of write downs are not solely tied to subprime loans, but instead are linked to commercial real-estate debt exposure and other types of loans, these people said.

Bond prices down

Bernanke told the Joint Economic Committee of Congress last week that the Fed's actions ``will help to promote growth over time and to mitigate the risks to economic activity.''

The bond market is looking much like it did in December, when yields rose as much as 0.27 percentage point to 3.91 percent on average. The increase followed the Fed's Dec. 11 decision to cut its target for overnight loans between banks to 4.25 percent.

The slump in Treasuries since the bailout of Bear Stearns was interrupted on April 4 after the Labor Department said company payrolls contracted by the most in five years during March. At the same time, wages grew at the slowest pace since 2005, bolstering speculation that inflation will decline as Bernanke said it would.

The April 4 rally wasn't enough to keep Treasuries from declining last week. Two-year note yields climbed 17 basis points to 1.81 percent, and are up from 1.24 percent on March 17, the lowest since July 2003.