Good Monday AM,

Bonds continue to show strength as we trade up to resistance.

If Mortgage bonds do not break through, we will likely run down a bunch. Right now, it does not look like we have enough velocity to break through. The ten-year started off at 3.68% and is pushing up to 3.71. If we can close below 3.68%, we will likely test the level down, which is 3.44%, but if not, as it looks for the moment we could find ourselves back at 3.87%. No news today, but this is a huge news week. Most notably, the PCE and non-farm payroll numbers will be released this week. If you are floating, be very careful because we are at crucial levels with huge news coming that can quickly change the tone of the market

Bloomberg had a good take this AM.

Everyone is still talking about rate hikes. But what people are thinking about, more and more, is rate cuts. This is evidenced by the steepest inversion of the 2-10 spread in decades. The more inverted the curve, the more it implies that in the future the Fed will be lowering rates below where they are in the short term. In other words, as Bloomberg’s Michael Mackenzie notes, traders are making a big bet on a forthcoming recession.

This could get treacherous. While “pivot” talk has picked up, inflation is still extremely high. There are reasons to hope or believe that inflation has peaked, but not a ton of hard evidence yet. The fear, of course, is that economic activity starts turning lower before price gains really start to moderate, putting the Fed in a bind.

That said, it’s gonna be a big week for the US economy. Among other reports, we’ll get Dallas Fed Manufacturing Activity, Case-Shiller home prices, personal income and spending, JOLTS, initial jobless claims, ISM manufacturing, construction spending, vehicle sales and a jobs report. We’ll see if there are any indications of slowing momentum. And we’ll see if the market perceives cooling strength to be bullish (because it brings the pivot closer) or bearish (because of downturn fears).

The WSJ shared a link to not only track inflation on specific items but also offers a really good explanation on how inflation is calculated. To see which direction prices are going with the Journal’s inflation tracker. Check your own personal spending basket here.

Finally, this caught my attention:

The price of your Tesla Model Y varies by more than $60,000 depending on where you are in the world. The best deals are to be found in China, where prices start at $40,500, just over half the US retail price. But at the other end of the scale is Singapore where it’ll set you back a hefty $103,800—and that’s before excise and registration duties, which can double the overall cost.

Please remain safe and stay healthy, make today great!