June Treasury Bonds finally broke out above the recent double-tops at 118’02, but failed to attract strong buyers, before reversing back to the downside. The initial reaction to this morning’s low CPI number drove Bonds higher on short-covering. This rally didn’t last long as heavy selling pressure hit the market following the release of the Weekly Initial Claims Report. This report was on target, turning traders bearish.

Later in the morning, the friendly Leading Indicators and Philadelphia Fed reports helped accelerate the move to the downside. Today’s reports may have convinced traders that the Fed may be closer to hiking interest rates then previously thought. Losses may be limited if the break in stocks accelerates to the downside, forcing investors into the safety of the Treasuries.

U.S. stock indices are trading lower at the mid-session. Concerns about another flare-up in Greece are encouraging traders to lighten up long positions. With cheap money expected to be around for an extended period of time, expectations are for the current rally to continue. A stronger Dollar triggered by a weaker Euro and lower demand for risk may ignite a profit-taking break. At this time, the trend remains up with no threat of a change, although the markets are vulnerable to a correction.

April Gold is trading higher despite the stronger Dollar. This could be trader reaction to a possible flare-up of the financial problems in Greece. At this time the charts indicate this market is caught in a short-term range between $1145.80 and $1097.30. A trade through $1097.30 will turn the main trend to down. A rally through $1145.80 is likely to trigger an acceleration to the upside.

June Crude Oil is trading lower but still within striking distance of the recent main top at 83.80. A breakout above this level sets up a possibility of a test of the high for the year at 85.95. Fundamentally, OPEC left production unchanged and inventories were up. Both events had virtually no effect on crude oil. This indicates that risk sentiment and the desire for higher risk assets are having a bigger influence on crude oil. If trader turn against risk then look for a short-term break to begin.

At the mid-session the U.S. Dollar is trading better against most major currencies with the exceptions of the Japanese Yen and New Zealand Dollar. Nervous investors removed risk from the equation overnight on concerns that Greece would not get the aid from the Euro Nation that traders had built into the recent rally.

The break in the Euro started late Wednesday when news came out that the political party representing German Chancellor Merkel said that a bailout was unlikely and that Greece may have to seek aid from the International Monetary Fund. This weakened the Euro, forcing a lower close. This news then spilled over into the markets overnight, putting pressure on higher yielding currencies while helping to drive traders into the Dollar for safety.