Good Monday AM,

The NY State Manufacturing survey tanked to -11 and bonds are cautiously rallying (price up, rate down). The charts tell us there is more to come with this rally. Be careful with Mortgage Bonds. We do not want it to fail again if it tries to cross the current channel’s resistance. If it does, it could run back down about 50bps. So far, so good. I am looking for the ten-year treasury to test 2.76 (currently at 2.88 and down from 3.20 just 10 day sago).

Last week the Senate voted overwhelmingly to confirm Fed Chairman Powell for another term running the Fed. Shortly after the vote, Federal Reserve Chair Jerome Powell reaffirmed that the central bank is likely to raise interest rates by a half percentage point at each of its next two meetings, while leaving open the possibility it could do more. In a interview with the Marketplace public radio program on Thursday, Powell made clear his determination to get inflation under control but conceded that the Fed’s ability to do that without triggering a recession may depend on factors outside its control. “If the economy performs about as expected,” Powell said, “it would be appropriate for there to be additional 50-basis point increases at the next two meetings.”

A little tale of caution…

El Salvador’s president went all in on bitcoin. Then it tanked. President Nayib Bukele has spent hundreds of millions of dollars in taxpayer money buying bitcoin and rolling it out as a national currency. The country’s planned placement of an exotic $1 billion bond that bets on a rise in bitcoin’s value has stalled, according to the country’s officials, and the market value of El Salvador’s $100 million in bitcoin holdings has dropped by about a third, squeezing the country’s finances further and raising the odds that it will default on its more than $24 billion in sovereign debt, Santiago Pérez reports.

More on the bear market and recessionary concerns soon!

Please remain safe and healthy, make today great.