You might be thinking that with only 9 weeks to go until the US runs out of options to avoid defaulting on some of its sovereign debt that domestic interest rates would be climbing north.  You also might be thinking that with only 4 weeks to go until the Federal Reserve ends its $600 billion bond buying program that it began 6 ½ months ago, interest rates surely must be headed higher at this time.  But all the academic logic in the world cannot override the longstanding belief that when the darkest economic clouds develop around the world, investors buy US Treasury notes and bonds (driving prices up and yields down).  The proof: the yield on the 10-year Treasury note fell to a calendar year 2011 low (3.06%) last Thursday (5/26/11) on the same day that the average 30-year fixed rate mortgage dropped to 4.60%, also a 2011 low (source: BTN Research).

The S&P 500 has gained an average of +1.6% (total return) during the month of May since 1990.  But with only a single trading day remaining in the month, the stock index finds itself down 2.2% for the month.  Lacking a significant rally today (5/31/11), the index's streak of 8 consecutive "up months" will end.  However the S&P 500's +6.7% YTD gain through last Friday (5/27/11) is its best YTD performance as of Memorial Day since 2007 (source: BTN Research).