Market Snapshot July 2, 2018

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Good Monday morning on this holiday week,

 

Bonds opened on the strong side, but have since given back those opening gains. The ISM Index beat expectations, but construction spending missed. The push-pull between stronger economic data and looming tariffs are creating some stagnation in the markets as those opposing forces cancel each other. My concern really comes down to the basics of supply and demand, and the Fed today will further reduce its investment into mortgage backed bonds. Less demand will impact rates despite a flight to safety from tariffs. This is a holiday shortened week (almost the whole week…as traders are likely taking off tomorrow through Friday) and we will have the employment report on Friday, which will be interesting. This would not be the week to gamble as it looks that there is more downside risk than upside gain. As of right now, the 10-yr Treasury has popped up to 2.87% and mortgage bonds are flat on the day.

 

Make today great!