Trading has been brisk for a Monday morning/afternoon, adding to Friday’s rally in bonds/MBS. Stocks are taking it on the chin, down 180 points on the Dow and 54 points on the Naz. The stock slide/bond rally, got going across the pond when the World Bank revised 2009 global growth from minus 1.7% to minus 2.9%. What is looks like is equities are running out of steam after a 40% rally off the March bottom, commodities are selling off as inflation fears subside and lack of global growth hurts demand, and currencies rebound (U.S. dollar) as the saber rattling subsides. Hard to tell if money is just regrouping into quarter end or there is a serious risk event into Wednesday’s FOMC meeting. Geopolitical concerns fit in the mix as well with the Navy bird dogging a missile laden North Korean ship as well as Iran in the midst of political unrest. This will be a big week with particular focus on Wednesday’s events. FOMC and the all important policy statement, Durable Goods Orders, New Home Sales, and the middle leg (5 year note) of 104 billion dollars worth of treasury auction paper. No news today as bonds wait for stocks to make the next move. Bonds/MBS are right into good resistance, up 24/32’s on the 10 year (yield 3.70%) while mortgage backs are 12/32’s better than Friday’s close. Stocks have yet to find a bottom but seem to be holding the 8300 area. From the technical front, the strength today has forced the market above the 21 day moving average at 3.71%. This is also the 62% retracement level from the 4.0% yield blood bath we took a week or so ago. We would really like to see a close at 3.69% or lower to endorse the trend. Into supply and the FOMC, this might be a tall order. Let’s call the market neutral yet still on steroids, meaning the price you see today, will probably not be there two hours from now let alone tomorrow. Trouble is, will it be better or worse?