Good Tuesday AM from your Hometown Lender,

It is election day and that is the only focus for markets, governments, and the public. From every report I am reading up through right now, it seems that the election is deadlocked.

There was a little data today which did come in stronger, and the bond market is selling a bit right now, but I think the correlation to bond moves are still more tied to the election than data. Looking for evidence, just look back to last Friday’s horrendous jobs report, which was ultimately ignored in favor of “something else” that drove weakness after the initial gains. Fortunately, the data will again take precedence very soon. I don’t know that politics and data will diverge as soon as tomorrow morning, because markets will still be reeling from the election and I am not even sure we will know who won by tomorrow, but once the dust does settle (hopefully before the FOMC announcement Thursday AM), data will again be important. For what it is worth, I do expect the Fed to cut in November and, if the data continues to come in as it has, I also expect a cut in December.

Today’s rate sheets are a bit worse and reflect the volatility in bonds that we’ve seen.

With volatility being high today and reprice risk is high today as well. The thing we can count on for the moment is that e markets will trade on both emotion and rumor.

Watch for a red or blue wave (a red wave is statistically more likely based on the current seats being voted on in Senate). A unified party in Congress and the White House would have more of an effect on rates than a gridlocked one. Red will hurt rates more but is likely a better solution for the economy than a Blue wave. The best result for the country and the market would be for a split government.

Stay safe and make today great!!!