It's always darkest when your eyes are closed

Market observations for the week of May 17 to May 21, 2010

Claymore Investments, Inc. 25 May, 2010 | 10:51PM

The major market indices finished the week broadly lower. Volatility remained elevated on growing uncertainty over whether the $1 trillion EU/IMF bailout package will have the teeth to remedy the growing fiscal problems in southern Europe.

The flight-to-safety trade was in high gear last week as investors shed risk assets (stocks, commodities) in exchange for the safety of the U.S. dollar and Treasuries. The yield on the 10-year closed at 3.23%, down from 3.45% on the prior Friday, and has fallen from nearly 4% in early April (price and yield move in opposite directions).

The recent weakness has officially pushed the Dow, S&P and NASDAQ into "correction" status (a correction is defined by a 10% pullback from a prior peak). This is the first 10% correction since the market rally began in March of 2009, and was long overdue, in our opinion.

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Claymore Investments, Inc.

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