Wednesday, March 31, 2010

Stock Market -- Position Overview

Our previous newsletter, dated February 27th, stated that the stock market remains within an elevated period of consolidation, as the various stimulus programs try to rejuvenate the US economy, at least for the near-term. We further projected that the DOW would remain price-supported, due to these various stimulus packages, and anticipated a trading range for the month between 9,800 and 10,600. The actual result was a slightly narrower trading range, during the course of the month, between 9,835 and 10,438.

We also stated that we could see interest rates go higher, as various states and countries find themselves in budget deficits, and have to pay more to borrow money, because of the slippage in their ratings. This could lead to higher interest rates all around, as people value risk more carefully, and cause US treasuries to decline in price, inversely producing higher yields. We, therefore, anticipated that the US 10-year Note could have a base-yield of 3.53% or higher, as prices decline and yields inversely rise, during the course of the month. The actual result saw the US treasuries decline in price, producing a US 10-year Note yield-range for the month between 3.54% and 3.83%.

The US dollar was projected to decline in value, at least for the near-term, during the course of the month, with a anticipated euro fx equivalent trading range between $1.34 and $1.40. This forecast proved to be fairly accurate, as the US dollar remained under near-term pressure, producing a euro fx equivalent trading range for the month between $1.3438 and $1.3947.