I am starting to see a couple of interesting short term patterns emerge in the markets. US equities are starting to slowly trend back upwards:and risk in the market (as measured by the VIX) seems to be subsiding:
The big question on everyone’s mind is the rise in US equity prices being caused by short term traders betting that the European’s are starting to address their banking problems – or is it due to poor economic data and the hopes that the Fed will start a new “pro-market” stimulus program.
However, a Bloomberg survey shows investors seem to be mainly worried about Greece and the Euro (which will negatively impact their banks):
In addition, US bonds seem to be in a “holding pattern” as investors are still allocating money to safe haven investments, as US Treasury Bonds are still considered one of the safest investment in the world by many:
Investors wondering if the still forming upward trend in the US stock market is the start of a summer rally, or just a short term trading rally, should keep an eye on the bond market. A breakdown of its current sideways trading pattern will be an indication that global investors are starting to re-allocate their portfolios back into equities.
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