A lot of big changes in the world today affected both Stocks and Bonds.
Bonds rallied big on concerns over job losses as the weekly unemployment claims moved sharply and unexpectedly higher. The resulting concerns over the economy brought in a flight to quality. In addition, a dollar rally with a lot of "short covering" caused a big move and some of those dollars needed to be "parked" in Bonds. We did touch the 200 day moving average in the Fannie Mae Residential Mortgage Backed Security Market (RMBS). Days ago this seemed like a long way up the ladder and here we are. Tomorrow's Non Farm Payroll Report will be a market mover for sure! The sentiment is for 185K jobs created for April, which is not near enough to create a recovery in jobs.

The bigger news was that the Central Bankers around the world are finally adjusting policy into more non inflationary practices. The Fed's QE II is set to end, the ECB indicated that they were not going to raise rates again, soon and ultimately this led to a dollar rally that caused a big shake up in the Stock Market and the Commodities Market.

Stocks sold off as the dollar strengthened against all currencies and as the day wore on the "short covering" resulted in more carry through for the rally. This caused Oil, Gold, Silver and other raw materials to sell off sharply with Oil closing below $100.00 / barrel. This will reduce the affect of inflation but likely wipe out a lot of wealth created by the stock market gains due to the fact that the market has been propped up by the weak dollar and subsequent "carry trade."

It is safe to FLOAT into the jobs number because the afternoon rally gives us a cushion should it surprise for the better but given the ADP report on Wednesday and the last three weeks of gains in initial jobless claims, it is very likely that we will miss the 185K mark and see an uptick in the unemployment rate. The uptick will result because the news of all these new jobs has brought in more job seekers so therefore more people will be counted in the household survey as unemployed.

I just posted this to my site: www.rglovermortgage.com

Thursday Market Wrap and Friday look ahead: