Market Snapshot July 10, 2018


Good Tuesday A.M.,


A bit early, as we typically see them towards the end of July and into August, but this could be the summer doldrums where markets just stagnate (at least the bond market). For more than month now, mortgage backed bonds have traded in a very narrow range (roughly 25bps) and the 10-yr has been stuck between 2.80% and 2.90% for the same time. Stepping back from the intra and inter day minutia, there has just not been much movement in bonds. We know this won’t, so the question is which way do bonds break out? It’s a very good question, anyone want to chime in with an opinion? I just don’t know. I can make a case for either direction. On the higher rate path, the US economy is doing well, stocks are doing well, and the geopolitical issue of tariffs aren’t creating any concern (at least for now). On the likelihood of rates heading lower, growth elsewhere is slowing and our yield curve is flattening out, which is a typical sign of if not a recession, at least a slowdown in the US. We do have PPI and CPI numbers this week which may give us some needed direction. Despite any evidence rates will improve, the nod always has to be to lock to protect the current market and if rates do improve, float down. Currently the 10-yr is at 2.86% and Mortgage bonds are -3bps


Not much else for now, other than thankfully we were able to collectively have a sigh of relief for the Thai soccer team that was trapped in a cave for the past 2 weeks and were all rescued.


Make today great!