Market commentary

Bond prices have moved higher; yields lower with no substantive economic data today. However, there are a few issues demanding the attention of the markets. OPEC could not agree on a deal to increase output so oil prices once again rose above $100/bbl; just when I was able to pay less than $4.00 for a gallon of gas.

In Europe, it appears Greece will technically default, or as the euphemism being used states, a selective default. Investors would be forced to swap existing debt for new bonds with extended terms.

If one thinks defaults on bond obligations are limited to “poorer” countries we may be in for a surprise. U.S. Republican lawmakers are considering allowing a brief default as a means to force deeper spending cuts as a condition to raising the U.S. debt ceiling. An adviser from China’s central bank commented this idea is “playing with fire”.

Later today the Fed will release its Beige Book survey of economic activity and the U.S. Treasury will auction $21 billion 10 year notes.

Kudos to JP Morgan CEO Jamie Dimon for his comments during the Q&A session after Fed Chairman Bernanke’s speech at the International Monetary Conference. As if speaking for all of us in the finance, banking and mortgage industry, Mr. Dimon began by reading a laundry list of changes that have already occurred, many of them dictated by the markets rather than by new laws or regulations. He then said, “Now we’re told there are going to be even higher capital requirements, and we know there are 300 rules coming, has anyone bothered to study the cumulative effect of these things and do you have a fear like I do that when we look back and look at them all, that they will be the reason that it took so long for our banks, our credit, our businesses, and most importantly, our job creation, start going again? Is this holding us back at this point?"