Overview: The last trading day of the month and first quarter saw a lot of “position squaring” and the usual “window dressing” by institutions wanting to show performance in the first quarterly report of 2012. The only “fly in the ointment” was the possibility of China cutting back on commodity purchases, a warning that came from two of China’s most influential government think-tanks. As the world’s number two economy, any such cutback would not bode well for producing countries especially producers of construction materials and consumer goods. With China’s growth rate revised downward, some pressure on product demand ranging from energy, metals, food, cotton and other could be impacted. We continue to suggest that a global recessionary trend prompted by a continuing U.S. labor condition as well as so called austerity programs instituted by some Euro zone countries and the ongoing debt crisis will hamper forward growth prospects. The “season” of “preservation of wealth” is upon us. Now for some actual information…
Interest Rates: June Treasury bonds closed at 137 24/32nds, down 1 and 4/32nds or 0.81% pushing the yield on the 30 year bond up to 3.345%, up from the February 3.09%. The “improvement” in the economic outlook offset concerns for the European debt crisis. Less demand from Europe for the relative safety of U.S. treasuries another factor in the selloff Friday. We are close to our suggested low end of the 135-143 trading range and would await additional economic data before taking any action. Hold strangle spreads suggested last week. I added the June Treasury bond futures chart here.