Market Snapshot December 4, 2017
Good Monday AM,
Our taxpayer dollars were busy over the weekend as the Senate voted and passed its version of a tax bill. All in all this has gone pretty quickly since the House version was first passed towards the end of November. Both the House and Senate will now work to reconcile each other’s tax bill and hope to have it ready for a vote and then presidential signature by 12/15 (when the House goes on break). Between the tax bill and less concern over Michael Flynn’s plea deal, stocks continue to move higher. The Dow is up another 230+ this am. We would normally see bonds tanking on the heels of a rally in stocks, but bonds seem very content in the range they are in. It’s odd and I wouldn’t want to speculate as to why. Currently the 10-yr is at 2.39% and mortgage bonds are -2bps. It is tough not to take a hard look at today’s rates and feel it’s a good time to lock.
This is payroll data week (starts with ADP report on Wednesday, Unemployment report on Thursday, and then the Jobs report on Friday) and we have a Fed meeting next week (the Fed is likely to raise short term rates .25%). Markets are already pricing in that rate hike and will be equally interested to hear what Ms. Yellen and Mr. Powell have to say about it. By all accounts, the economy is growing at close to a 2.5% rate. US bonds are the safest and paying the best returns from our closest partners which is one reason why the 10-yr bond continues to be popular (keeping rates down).
One challenge to be watching on the horizon is what will happen as the Fed continues to raise short term rates, longer term rates down move and the yield curve flattens. Historically, those can be signs of a recession. Even if not a recession, I would expect that to impact growth and potentially be the catalyst for the market correction so many big name pundits have been predicting. OK way too far ahead…
Make today great!