Good Tuesday AM,

No news today in the US, (in Europe their economic sentiment continues to nose dive) but the volume gets kicked up tomorrow with CPI.

For now, we are getting some follow through buying from yesterday. It has pushed the 10-yr back below 4% to 3.96. Mortgage bonds are eking out a small gain. Yesterday, we did have some Fed speak.. It was a mixed bag which is a positive as far as I am concerned. During the last year, all Fedspeak was in lockstep that rates are heading higher. We are starting to see some crack in that formation. Two non-voting Federal Open Market Committee (FOMC) officials spoke in favor of more rate hikes (Cleveland’s Mester: rates have been that restrictive so far; San Francisco’s Daly: a couple more rate hikes will likely be needed this year). On the flip side, Atlanta Fed President Bostic argued that inflation could slow to 2.0 percent without additional rate increases. And on a different note, Fed Governor and Vice Chair for Supervision Barr spoke about bank capital requirements, proposing stricter capital rules for banks and bank holding companies with assets above $100 billion on the balance sheet.

Under the plan, large banks could be required to hold an additional two percentage points of capital, or an additional $2 of capital for every $100 of risk-weighted assets. This will be a big deal and is a good segway into the below chart showing how mortgage credit availability has literally tanked. Banks will continue to be (and be more) reluctant to lend knowing they have to raise more capital to do so.

And his was interesting (to me since I am an Avid Disney fan and visitor).

Visitors to Disney theme parks this summer are encountering something they haven’t seen in a while: elbow room. Data from a travel company that tracks line-waiting time at Walt Disney World in Orlando, Fla., shows that this year’s Independence Day weekend was one of the slowest in nearly a decade. Travel advisers and industry analysts say the slowdown is the latest sign that Disney’s recent price hikes and changes to park operations have soured some families on visiting the Most Magical Place on Earth. Sounds like a good time to go to the happiest place on earth.

Please remain safe, stay healthy, & make today great!