Good Tuesday AM,

The Stock market opened way up with Nasdaq at a record high (Dow +183) after the European Central Bank was said to be likely to make only small adjustments to its guidance on monetary policy next year. Stocks loved the cheap money and the status quo, this will likely have a negative impact on bonds however, this a.m. bonds are hanging in. The 10-yr at 2.36% and Mortgage bonds +4bps. The big news day is tomorrow, when a slew of information will be released but there may be no one at the desks to really care (when a tree falls in the woods with no one around, does it really make a sound?).

Rick Santelli from CNBC is talking about yield inversion (fancy words to explain that rates on longer bonds are lower than rates on shorter bonds). That’s not supposed to happen and can be a precursor to a recession, but it will also likely push long term rates down and with it mortgage rates. Just something to look out for.

Those are my sage words for today… nothing really happening (Oh, North Korea is now a terrorist state.. did you know?). I would expect some volatility with the comments from the ECB and thin trading from here on out. I would not be surprised to see bonds leak through the rest of the week. In theory, next week should stabilize.

Make today great!