Yesterday, the three main US indices had significant gains. The S&P gained 6.37%, while the DJI gained 5.8%. Much of this pop came from Citi's CEO claiming that it was profitable the first two months of the year, and On that news Citi jumped 38%. GE also popped.
There is much uncertainty in the market to declare a bottom. Libor rates are creeping upward, on fear that the government bailouts will not solve the crisis. The Libor OIS spread has increased to the highest level since Janurary 9. The anticipation of the Treasury Departments new plan to handle toxic assets, will most likely lead to some loss of ground in the coming week. According to Bloomberg, the Treasury may use capital injections to provide incentive for banks to sell their toxic assets. We will see if the carrot and stick works this time to spur trading of mortgage-backed debt.
Have we reached bottom? I think not. The market will still have to test lows at least once more. Nevertheless, it sure was nice to see green in the Obama Bear Market.
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