10-Year Rates continued their dramatic move, nearly doubling from the beginning of the year. Rates were spurred on by today's 10 year government auction which priced the notes at 3.99% with strong demand. As mentioned in this month's Trendsetter Market Letter, we anticipated that rates would reach the 4% mark and stabilize. If you didn't receive a copy of the latest Trendsetter to see where rates will be headed next, be sure to drop me an e mail and I'll be glad to send it out.
The stock market reacted poorly to the auction but the still remains in positive territory for the month. As mentioned several times this month, I am targeting the 900 level on the S&P by month's end. We sold July calls at the 940 level and while the S&P rose as high as 952 this morning, I remain confident that we are overdone.
I would expect both stocks and rates to fall going forward.