Courtesy of John Nyaradi.
The morning after a powerful stock market rally brings relief and concern
Yesterday’s rally fueled by global central bank intervention eased conditions in Europe for the time being while U.S. economic data remains mixed.
The all important financial sector (NYSEARCA:XLF) declined in early trading along with European problem while Italy (NYSEARCA:EWI) and U.S. Treasury Bonds (NYSEARCA:TLT) as concern over the health of the global financial system remains at elevated levels.
Europe saw some relief as Italian 10 year bonds dropped below the crucial 7% level, French borrowing costs declined and Spain met its bond auction targets.
But 3 month Eurobor rates remain high, indicating continued stress in the European financial system inspite of the coordinated invervention.
At home, jobless claims came in above the crucial 400,000 level, up from last week while manufacturing and home construction registered gains.
Bottom line: Yesterday’s central banks intervention was an emergency procedure and now the question is how much more medical care will the patient need?
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