Market Snapshot May 2019

skyline
Good Monday AM,
 
I hope you had a fantastic weekend. Markets are certainly in flux today. News from China is that they will retaliate with tariffs of their own against $60 billion of US goods. Stocks have gone from caution to being spooked today. The Dow is down 600 points and while the tariffs may not directly impact bonds, they certainly are having a positive indirect affect. The 10-yr is at 2.40% and my expectation is that we will see it drop to 2.36% or below soon. Let’s see how the day closes out (the Dow has made a comeback the last few sessions) and if stocks stay down, I am likely going to suggest floating. For now at least this am. I am being patient.
 
There is no economic data out today so this is all markets are digesting today. Tariffs as we are already seeing, will lead to curtailed GDP. The Fed is of course seeing it and will hopefully react to it as they could have the last meeting by lowering the Fed Funds rate. The fly in the ointment is that China is also a top 3 (I don’t know if today they are ahead of japan or behind) holder of US Treasuries and if China was to get spiteful over the tariffs, it could just start selling the Treasuries it holds. That would be no Bueno for us (and the US) and also China. Hopefully it doesn’t get that far.

Enjoy the lower rates (although the yield curve is inverted over it and brings its own concerns) and let’s hope the 401k doesn’t become a 201k with the stock market sell off.
 
Make today great!