Good morning and welcome to another Monday Morning Market Commentary. Thank you for taking the time to read/watch this week’s commentary.  This past week we saw stocks continue their climb higher but this time bond yields didn’t rise as well. We also had a huge announcement over the weekend about a bail out option for Cyprus that would enforce a 10% tax on all bank deposits in the country. This is the first time we’ve seen such a tax talked about, let alone put into place. I’ll talk about this more in just a minute.
When we look at the chart of the S&P 500 from last week we see that stocks traded in a very tight range all week, less than 1% between the high and low. Stocks did close near their highs for the week, with the S&P 500 ending at 1,560.73, up 0.6% for the week.
This past week bond yields didn’t go along for the ride and we saw a sharp divergence, with the 10-year Treasury yield going down. We have seen this before and it normally isn’t good for stocks when bonds start acting like this. Remember last week when I talked about how important it would be for the 10-year Treasury yield to hold above 2%? As you can see on the chart, 2% was just a hair too much, and Treasury yields closed at the lows of the week at 1.996%. Continue reading →