Benchmarks : Weekly Update

• Was a good week until Plosser comments (FF at 2.50% in 1 year) put pressure on short USD positions right at week's end. Net, tiny down in P&L from last week.
• Before Japan earthquake and Fukushima, my thinking was - protect short USD/fx and long commodity positions with long US interest rates. This was destroyed by flight to quality into USTs after the disaster.
• Now, however, it seems that the original plan is working again with market's focus back to US rates and differentials.
• USDX : Too early to call for a reversal of the well established downtrend despite rally in reaction to Plosser.
• US10YY : Yields look like heading higher.
• S&P500 : Uptrend continues after recent shakeout.
• Gold : Disappointed at failure to hold close above previous old high at 1444. Am still bullish but cautious.