Market commentary

The ISM non-manufacturing index for the month of March fell from 59.7 to 57.3, below expectations. While the non-manufacturing report is not as strong as the manufacturing report, it remains a positive indicator for economic growth despite falling a bit from February. The current level of activity is consistent with GDP growth in the 3.5% range. The Bank of China raised interest rates for the fourth time since the global financial crisis ended, raising their one-year lending rate from 6.06% to 6.31% and the one-year deposit rate from 3.00% to 3.25%. The move comes before the monthly release of inflation in China, which grew last month at 5.2%. While we are discussing inflation, according to a Bloomberg article, “Federal Reserve Chairman Bernanke said he expects an increase in commodity prices to create a `transitory` boost in U.S. inflation”. I guess that is Fed speak for don’t worry about higher energy and food prices for now because they will eventually go away. In the interim, that does not bode well for the average American, of which I am one. Market reactions to this data and news are mixed. U.S. stocks are in positive territory while bonds are worsening. The yield on the 10 year note has risen to 3.48%, up from 3.42% at the close on Monday.