Peak Credit Was Likely Achieved The First Week Of May 2011

Credit Report for the week ending May 6, 2011

Annaly Capital Management, NLY, the premier agent of financing and securitization, of US mortgage debt, manifested a lollipop hanging man candlestick suggesting that a market top has been achieved in its stock value, and that peak results from the creation and marketing of government debt have been achieved.    

Housing Doom reports Freddie Mac posts first quarterly gain in 2 years and Intermediated Bond Fund, Goldman Sachs US Mortgages, GSUAX, moved to a new high.

Junk Bonds, JNK, rose to a new high this week

Mortgage Backed Bonds, MBB, rose to a new high this week.

Total Bonds, BND, puts in a new high of 81.19.

The Interest rate on the 10 Year, $TNX, has fallen to the edge of a head and shoulders pattern, suggesting that interest rates will either fall significantly, or restart their progression higher once again. The twenty year US Government Bonds, TLT, and the 3 to 7 Year US Government Notes  IEI, and the 30 year US Government Bonds, EDV, and the Zeroes, ZROS, may have attained an Elliott Wave 2 highs this week, and thus all may be falling lower in value next week.

Corporate Debt, LQD, and long term corporate bonds, BLV, are likely putting in an Elliott Wave 2 High as are municipal bonds, MUB.

The 30-10 US Sovereign Debt Leverage Curve Daily. $TYX:$TNX, is likely putting in an Elliott
Wave 2 High and is likely about to turn lower, that is de-lever, as the US Dollar, $USD, rises and bond vigilantes call the interest rate high on US Treasuries, as well as world goverment bonds, BWX of all types as world currencies, DBV, emerging market currencies, CEW, and commodity currencies, CCX, fall lower. All wealth, all stock wealth, ACWI, all bond wealth, BND, and all commodity wealth, DJP, is given seigniorage, that is moneyness by world central banks and most importantly the monetary policy of the US Central Bank, the Federal Reserve.

World government bond values, BWX, and international corporate bonds, PICB, turned lower the week ending May 6, 2011 on the failure of quantitative easing and the downturn of DBV, merging market currencies, CEW, and commodity currencies, CCX. Bond values overall, BND, are now likely to succumb debt deflation, that is currency deflation.

Distressed investment mutual bond fund FAGIX, put in a high on Friday April 29, 2011.

Bloomberg relates U.S. Consumer Credit Rose $6 Billion in March, Fed Says  Credit companies recently putting in rally highs include: Capitol One, COF, American Express, AXP, Discover Financial Services, DFS, and Encore Capital, ECPG.   

Utilities, XLU, such as NextEra Energy, NEE, and Ida Corp, IDA, as seen in this combine chart   are putting in market tops on the recent rise in the Euro, FXE and on the recent fall in the the 10 30 Yield Curve, $TYX:$TNX, which is likely putting in a bottom. The Flattner ETF, FLAT, is now likely to continue to fall lower once again.  Debt ridden NextEra Energy, NEE, is likely to be a faster faller than IDA.

Alaska Air, ALK, rose to a new rally high as airlines, FAA, likely rose to an Elliott Wave 2 high on the drop in oil, USO, prices.

Doug Noland writes “Beyond the disconcerting commodities markets, this week was also notable for confirming potential market vulnerability to a rising dollar.  When the dollar catches a bid, risk assets generally feel the pressure – virtually tick for tick.  This week’s abrupt downturn in commodities prices hit the commodities currencies, providing impetus for a reversal in the dollar.  A less than hawkish ECB yesterday provided the dollar another push.  And today’s report that Greece may be contemplating leaving the eurozone further pressured the euro, in the process adding fuel to the dollar rally. As a seemingly long trading week comes to an end, it would be helpful to know how severely the commodities stung the hedge funds – and what the Greeks are up to.  The global “risk on” trade has suffered a meaningful crack – as the clock ticks down on QE2.”


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