U.S. equity markets are down at the mid-session led by falling oil and bank stocks. The weakness initially began overnight with heavy Asian selling on concerns that China would begin another round of monetary policy tightening. Since the New York opening, the market has felt pressure from falling energy and bank stocks. Energy stocks are down because of the drop in crude oil. Bank stocks are feeling pressure because of the introduction of a new bill proposal regarding financial system regulation.

The rising Dollar is also hurting demand for higher risk assets such as equities. The strength in the Dollar can be attributed to weakness in the Euro and British Pound. The Euro is seeing pressure on speculation that a bailout plan for Greece has stalled. The British Pound is down on concerns over a possible debt rating cut.

Trader demand for safety helped to underpin the June Treasury Bonds earlier in the session but gains have been quickly erased. The drop in demand for higher risk assets should’ve driven investors into the safety of the Treasuries, but this did not happen, causing traders to pull bids. It looks like it may take a bigger drop in equities to drive up Bond prices.

April Gold was trading higher earlier in the session despite the stronger Dollar. This was most likely an indication that investors were becoming concerned about the possibility of a sharp sell-off in the British Pound. The threat of a downgrade from Moody’s is pressuring the Pound and raising concerns about its ability to cover the servicing of its sovereign debt. Growing concerns, both the Pound and the Euro are in trouble may lead traders to seek safety in hard assets rather than paper money.

June Crude Oil is trading sharply lower at the mid-session. A drop in demand for higher risk assets is triggering the weakness. Friday’s closing price reversal top was confirmed, helping to accelerate this market to the downside. Speculation that China may begin another round of tightening is helping to pressure the market. Downside pressure could help to drive this market down to a 50% level at 77.28.