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Friday, April 08, 2011


We are counting down to midnight when the federal government may shut down if there is no budget deal. Frankly judging by the action in equities its really a non event since in the end the markets know this silly poker game will eventually get worked out. But if they can't agree on chump change, what happens in a few weeks when they have to tackle the debt ceiling? The latest headlines can be found here with commentary here. Just be sure to scroll down on the page if its not near the top.

Meanwhile the treasury market may be getting ready to take off on another upleg in yields after trading sideways since Decemeber. Yield markets are still digesting the ECB rate hike and the prospect that the Fed may be getting ready to do the same later this year.

And yield markets may also be sniffing out the possibility that the debt ceiling is going to become a real battle. Bond markets may be on the verge of exerting pressure on politicians to do what they need to do. Otherwise the cost of money will go up in a big way and very quickly.

MLPS are right at new all time highs and are following equity markets higher. Stock futures are higher this morning and rates are up 5 basis points on the long end. Start keeping an eye on what happens if we see a breakout above 4.80% and 3.70% on the 10 year. At some point the yield spread may begin forcing money out of mlps. So far we are not at that magical point. Meanwhile crude is moving ever higher up above $111.00 this morning while nat gas sits at $4.00 and doing its usual immitation of going nowhere fast. No news on the mlp front and no upgrades or downgrades.

Forbes has a positive piece on Magellan Midstream Partners (MMP) as it argues the company is completely shielded from oil price fluctuations. Of course if they start selling all energy stocks one day , or if crude ever stops going up, it may not make a difference whether your exposed or not.

1 comment:

Max said...

Mark Ellis, CEO of LINE, was just on CNBC. He said it is a good time to buy natural gas assets.