SubscribeDaily Futures Commentary April 21, 2009
Tuesday, April 21, 2009
The general theme this week could be risk aversion as problems in the U.S. banking system resurfaced after several weeks of hibernation and triggered a massive migration to safe havens such as the U.S. Dollar, U.S. Treasuries, and even gold.
Equity markets are under pressure this morning following the release of earnings reports from five Dow component companies. The real cause of the weakness is the banking sector. Yesterday traders noted that Bank of America still had billions of Dollars of non-performing loans on the books. Investors took a “where there’s smoke, there’s fire attitude” and sold banking stocks under the assumption that U.S. banks may still have exposure to toxic assets.
After a few days of watching the Treasury yields creep higher while money was redeployed to the equity markets, investors sold stocks and moved their cash back to the safety of the bonds and notes. This trend is likely to continue as banking issues are resurfacing in the U.S. financial system.
June Gold could receive a boost on two fronts. Firstly, investors are moving money back into gold on speculation that the U.S. …
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