Financials: Bonds are currently 15 higher at 122’29, the 10 Yr. Notes 6 higher, the 5 Yr. Notes 2 higher and the 2 Yr. Notes fractionally lower at 108’30. Dec. Eurodollars are up 1 at 99.18. We remain short the 2 Yr. Notes and the Dec. Eurodollars. This morning’s Weekly Jobless Claims showed a decline of 12K versus expectations of a decline of 7K. However, continuing claims were higher than expected at 6,662,000 up 75,000. This was negated by the drop in weekly claims and pushed the long end of the yield curve (Bonds and 10 Yr. Notes) higher. Yesterday’s release of FMOC notes indicated the possibility of the Fed buying more long term treasuries (remember the announcement not long ago the they may buy up 300 billion over time) and that unemployment could stay in the 9% range through 2010. I still like being long Bonds on a sharp break but feel that the upside will be limited to the 124’00 to 125’00 levels.
S&P's: June S&P’s are currently 11.00 lower at 889.00. If you went short yesterday between the 914.00 and 918.00 levels I recommend taking the short term profit as my near term objectives have been met. Longer term I suspect the market will once again see the 875.00 level. I feel that in order for the market to have a sustained rally we will have to see a somewhat weaker dollar, renewed inflation and some strength in the Housing Market. Given the reasons stated above in my Financials comment I do not see this happening in the immediate future. I will be on the sidelines through the holiday weekend.