Matthew Craft

Today, per Nasdaq.com, the Dow Jones Industrial Average rose by 4.49 points to 13107.48, the S&P 500 went up 1.19 points to 1410.49, and the NASDAQ gained 4.05 points to close at 3081.19.  The average of the three gains is less than 0.1%.

That didn't stop the disseminators of CNN Money's email at the close of business from interpreting the result as being due to "signs of stronger U.S.growth." Huh?

It seems that Associated Press Business Writer David K. Randall made a bad call yesterday. But he only has himself to blame for engaging in what he should have known was wishful thinking.

Shortly after the government's report on economic growth during the fourth quarter of 2010 came in with an annualized 3.2% reading, Randall put out this this short report:

Stocks edge up after stronger GDP report

 

Stocks are rising in early trading after a report showed that the U.S. economy is growing.

 

... The Dow Jones is up 7 points, or 0.1 percent, to 11,997 in morning trading. The S&P 500 is up 1, or 0.1 percent, to 1,300. The Nasdaq composite is flat at 2,755.

What piffle.

When you increase demand for something, its price should go up.

In the case of bonds, if the demand for them increases, their price should go up, and their effective interest-rate yield should go down.

That didn't happen on Friday when the Federal Reserve began executing its second round of "money from nothing" quantitative easing. Even though the Fed increased demand, bond prices went down and yields went up.

Why? If you read a late Friday afternoon report by the Associated Press's Matthew Craft you essentially get a bunch of blubbering "I don't know" statements (bolds after headline are mine):

Treasury prices take a dive; Interest rates jump