Market Snapshot February 6, 2017
Good Morning on this fantastic Wednesday and best day of the week,
The State of the Union was interesting. Depending on which network you were watching, it was either the best or the worst speech of all time. I have no dog in that fight, but was curious how markets would react this a.m. Overnight, it looked like bonds and stocks were both going to get a boost. That fizzled earlier this a.m. and most asset classes seemed to be close to flat on the day. Without any new political manipulation (Brexit, China Tariff, US Gov’t Shutdown to name a few), I suspect this is the trading range we will see for the next few weeks (until the Feb data is released in early March). Without a reason to expect rates to improve, the safer bet remains to lock.
Elliot Eisenberg dropped some knowledge on us last night. A key reason 10-year Treasury bond yields have fallen from about 3.1% in Mid-November to just 2.75% today, despite a strong domestic economy, is weakness in Europe. Yields on 10-year German bonds have fallen from 0.55% in October to just 0.15%. Why? Italy is in recession, Brexit hangs over the continent, and European GDP growth is just half what it is here! Thus, Treasuries are suddenly looking much more attractive.
Make today great!