Bonds are up slightly and any gains will be muted until the results of this weeks auctions are digested and the FED announcement is made after their two day meeting that begins today. The format for the announcement has changed and this will be the first time the changes are effective. The announcement will come earlier in the day (it used to be 1:15 CST) and it will then be followed by a Press Conference with Chairman Bernacke. This is an attempt to give the FED greater transparency. We have not had two really strong auctions in a row and 2, 5, and 7 year notes go off this week beginning with $35 billion of two year notes today. Those results are due in around 12:00 CST. I usually target the day after a FED meeting as the best time to lock depending on the reaction to the announcement. If the markets do not react well it is best to lock in prior to any re price for the worse late in the day on Wednesday. We can FLOAT for now, albeit cautiously.

Stocks are up big and at their highs for the year (again). Ford's earnings were over 2.4 billion for the quarter, the dollar is down again and nearing some all time worse levels vs. other currencies. This is causing raw materials and their related stocks to gain as well. We'll see where we go from here because we are entering unchartered waters with the dollar and at some point the overall weakness will reach a tipping point to create a negative for either bonds or stocks. The US "carry trade" policy is becoming inflationary which, given the current environment, could create a wave of economic issues. Hopefully the Fed's statement tomorrow will bolster the dollar somewhat and while this may cause a market sell off in the near term it could stabilize the price of oil and raw materials muting some of the inflation pressures.

This is the update I posted this morning to my web site as "today's economic news." It turns out that the auction went fairly well and pricing improved. We can float for now and tomorrow will be somewhat historic due to the new way the Federal Reserve Board is doing the announcement after their meetings.

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