Market commentary

Interest rates spiked Tuesday afternoon in the aftermath of a poor 3 year note auction. Even the Fed’s $600 billion buying spree of U.S. Treasury bonds is not enough to keep interest rates from climbing in the face of generally positive economic data and perceived inflation. Regardless of the inflation measures touted by the U.S. and the Fed, the price of food, oil, gasoline and other energy related items have risen sharply. These are items folks spend money on daily, and the more food and energy costs, the less disposable income available for discretionary spending, or a new house.

Fed Chairman Bernanke, in his testimony to the House Budget Committee this morning, remarked that inflation is too low, the jobless rate is too high, and job creation is nil. I think we can agree on the later two items.

Today the U.S. Treasury auctions $24 billion of 10 year notes. Cross you fingers and hope for buyers to show up at this auction, otherwise a repeat of Tuesday will be in the near future. We will see the results at approximately 10:00 AM, PT.

Thankfully, bond prices have bounced slightly this morning, but this is tentative at best.