Despite the Federal Reserve’s aggressive moves to purchase or monetize billions of dollars in Treasury supply this year, prices continue to roll over. Treasury’s are in the midst of their worst year of performance since 1994 when the Fed began raising interest rates.

This time, the Fed is not hiking rates. Instead, it’s attempting to keep a lid on rising long-term rates by purchasing the mid to long-term yield curve in a bold attempt to influence important mortgage rates and other consumer loans. Thus far this effort is failing.

With almost every passing day global markets continue to advance with a seemingly nonstop upward bias. No correction, no backing and filling and certainly barely any days of serious profit-taking since the intermittent lows occurred on March 9.

The S&P 500 Index is now up 36% since March 9. Riskier trades like the MSCI Emerging Markets Index has surged 57% since March 2 and have almost doubled since October. Oil prices have rocketed 26% higher this year and junk bonds soared more than 12% in April alone.

Credit markets continue to improve since March with every segment of the fixed income curve enjoying an impressive rally or a compression of yields. At first, most credit spreads failed to join the broader rally in stocks off the March 9 lows. But now the entire gang has showed up at the party, including junk bonds, high quality corporate bonds, mortgage-backed securities, emerging market debt and even some leveraged loans. Only Treasury bonds are in the loss column this year following a stellar 2008.

Will natural gas make a comeback? The odds are pretty good that bargain-hunters at this distressed price will probably double their money over the next 6-12 months ahead of rising industrial demand and the possibility of supply outages caused by the looming Hurricane season. Also, demand typically rises during the summer as individuals turn up the air conditioning.

In interviews last Friday two icons of value investing in the United States predicted inflation will make a comeback as massive government stimulus combined with rapid credit acceleration eventually result in higher consumer prices.

Is the bull back? Not so fast, according to market history.

The MSCI World Index and the S&P 500 Index posted their best monthly gains since April 2003 gaining 10.9% and 9.4%, respectively. Credit spreads or the difference between super-safe Treasury bonds and riskier bonds saw risk premiums plunge last month while 90-day LIBOR rates rallied from 1.19% on March 31 to 1.02% yesterday.

U.S. Treasury bonds continue to get pounded this quarter following their steepest losses since the Federal Reserve started raising interest rates in 2004. And, despite Treasury purchases by the Fed to contain a rising yield curve, intermediate and long-term bond prices continue to decline sharply.

In 2009, long-term government bond prices have plunged 10.3%, according to the Barclays Long-Term Total Return Price Index.

Corporate executives might sell stocks for a variety of reasons. But company executives usually purchase their own stock for one reason – because they expect prices to rise.

Over the last 12 months every sector of the stock market has witnessed a significant increase in net insider selling; there isn’t a single sector of the market that’s been supported by net purchases.

Is the bear coming back for another grizzly round with the bull?

If you have an offshore portfolio invested in stocks and bonds then it might be the right time to boost your reverse-index exposure this week as stocks break important support levels on fears of a runaway pandemic (Swine flu) and, more importantly, overly optimistic corporate earnings estimates.

The Federal Reserve’s unorthodox policy response since the emergence of the credit crisis 19 months ago continues to bear fruit as credit spreads narrow. Though these and other measures are working to instill investor confidence, other important areas of the credit market remain hostage to illiquidity and historically high credit spreads that have failed to meaningfully narrow.