Market Snapshot May 15, 2018

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Good Tuesday A.M.,

 

Bonds are under some serious pressure and stocks are taking it on the chin as a result. The 10-yr at 3.06% and the highest rate in 6yrs. Mortgage bonds are off 34bps. The Dow is off 260 and worsening… no joke in here today.

 

Good commentary from Dan Rawitch (although I could substitute every other pundit as they are all saying the same this a.m.):

 

Ouch… we were hoping that support would hold. Before we could really test it, we leap frogged below it, all the way down another 35bps. There is no good reason for this and in fact, the DOW is down over 200 points, presumably, in sympathy. Retail Sales missed expectations, but they did revise last month’s number up. Empire Manufacturing beat expectations, and although Business Inventories shrunk, they didn’t shrink because or business cuts, they shrunk because sales outpaced inventory levels. Still, none of this justifies such a large gap down. I believe once the 10-year bond exceeded 3%, program selling was triggered. Mortgage Backed Securities soon followed. We should close or at least try and close the gap, so you should see some relief later in the day.

 

Bill Grosse, Art Cashin, Rick Santelli, etc, etc… surprised that that the bond market has taken such a hit but are firm that the economy is not strong enough to have the 10-yr above 3.25%. That’s little consolation right now, and I hope we don’t have to test their theory. It would be much nicer if bonds would strengthen up but there have to be buyers first for that to happen. Very dicey in here.

 

Make today great!