Market Snapshot October 8, 2019
Good Morning on this Terrific Tuesday,
A little bit of news to share. Yesterday Washington blacklisted 8 Chinese tech companies for human rights violations. The violations part may unfortunately be accurate, but the timing smells more like a negotiation tactic for the upcoming trade talks (which have almost no chance of succeeding). ‘Not only will we tax your goods, we will also stifle your growth’ is kind of the message. China thinks they have a chance of making a better deal for themselves now with the impeachment noise… it’s unlikely to succeed unless Mr. Trump is actually removed from office. More domestic data out today shows PPI is weak. Expected at .1% for September, PPI came in at -.3%. Bonds were up slightly on the day and are having a hard chance of keeping the gains. We are right up against resistance and need a push to get into that next trading channel. Last night the 10-yr jumped to 1.59% and has come back to 1.52% this a.m. The Dow is down 300 as, I suspect, stocks are getting the idea that we may be slowing. With all this news (and some additional pressure should this next round of trade talks fail), there is an increased expectation the Fed will cut rates again in October. We are still 3 weeks away so it’s too early to call. Mortgage Bonds need a boost and the 10-yr needs to close lower than 1.52% to get into the next trading channel. Below 1.52%, the path opens up to 1.44%. Then we’ll have something to talk about.
Make today great!