Market Snapshot July 13, 2017
Good Morning on This Fine Thursday,
Bonds under a bit of pressure again this a.m. with the 10-yr back to 2.35%. The 2.35%/2.36% rate is a pivot point for bonds and I suspect we will see which side of the fence they fall on shortly. I am still hopeful that it will be toward lower rates and with Ms. Yellen’s testimony yesterday that another rate hike is not a lock (she said she expects a few more rates hikes over the next years), the argument is that bonds are in a Goldilocks range now (not too hot or cold). The Fed will start to taper bond purchases soon and while I am not expecting it to roil markets, it is still something to be aware of. The economic data has not been great and the equity markets are looking frothy and markets have no reason to run from the safety of bonds. For me, the best argument though is really about supply and demand. As there is less to buy (speaking of mortgage bonds), the bids should go up and rates come down a bit. PPI was weak/on target this a.m. and we will likely see the same tomorrow from CPI. Maybe a catalyst for some more buying (lower rates).
Not much else to share but there was an interesting op-ed piece in the Washington Post on Glass-Steagall. If you have 4 min, maybe worth the read.
Make today great!