Aside from another amazing quarter from Apple that is single handedly driving markets this morning, the other focus today will be the FOMC meeting and Bernanke press conference. With about $200b and two months left in Operation Flatten the Yield Curve, we may have to wait until the June meeting in order to get good clues to whether they will stop cold turkey or extend it. We will see their economic forecasts but I don’t expect them to be much different from their prior ones and either way, don’t pay attention to Fed forecasts outside of what it means for what they’ll do next rather than for its accuracy. While the Fed thinks they are having a big impact on the longer end of the yield curve, its been Europe that has been mostly driving things. When things calmed in Europe after LTRO2, Treasury yields rose. In fact, the high of the year in the German DAX coincided with the high of the year in the US 10 yr yield almost to the day. Subsequently, treasury yields have since fallen in response to the renewed concerns with Spain, Italy, etc…Be sure however, if US bond yields jump, all else equal, after OT expires at the end of June, the Fed will be back in with another program. The UK economy is officially in a double dip recession as Q1 GDP contracted by .2% q/o/q after a .3% fall in Q4. Expectations were for a gain of .1% but since this is a 1st reading, it can always be revised to a positive gain. In the US, the MBA said refi apps fell 5.6% after the 13.5% jump in the week prior and purchases were up by 2.7% but after a 11.2% drop last week. II: Bulls 41.9 v 44.1 Bears 23.7, unchanged.
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