Friday, December 11, 2009

Shifting Intermarket Relationships?

The weak euro (above)/strong U.S. dollar has been associated with stock market selloffs for much of the bull market run. Lately, however, we've seen stock prices hold relatively firm in the face of dollar strength. Given some positive economic news this morning, I continue to keep on the radar the possibility of shifting intermarket themes, where economic strength could benefit both dollar and stocks and support higher Treasury yields at the long end. (Note that the 10-year rates have moved nicely higher this morning to 3.58%).