Treasury notes held ground on Monday as traders weighed the supply and demand issues of another $8.5b being purchased by the Fed ahead of the $71b coming to market this week from the Treasury department in new notes. The 10 year note value has created the biggest decline in two years of trade by reducing in value for six consecutive weeks.

The Treasury has created another mass of dollar backed notes for the market, and the Fed, to absorb at auction this week, and the move from the Fed to purchase the largest amount up-front that it has done since March 17th set the tone for other to follow. That sent the 10 year yield up to touch 3.16%, the highest since March 18th. The Fed continued its short-dollar mandate by buying notes at the fastest rate of knots so far, since the announcement of $300b, six month purchasing spree, with over $85b already bought and in the reserves.

The Fed is working hard to support the market, but now needs to take care that interest rates on these notes do not get too far above what is perceived to be the 3.2% target rate.

Crude oil for May delivery popped higher to $54.60, a five week high, on better than expected U.S. housing data, after holding major support at $48.50 last week. Oil closed higher by 2.65% on the day, a $1.41 gain.
Gold for May delivery closed higher by $16.10 at $904 per ounce, and test a major resistance area at $910 in the process at the 100 and 50 day SMA area. Bullion held in the SPDR Gold ETF remained unchanged at a record 1,100+ metric tons.