Good Wednesday AM (the best day of the week),

Bonds are having another really good day.

The GDP release which I was concerned about (and came in higher than expected) could have derailed the progress we are seeing in the bond market, for the moment. It has not. The 10yr is down to 4.28% and roughly 70bps lower than where we started the month. I don’t recall too many months where we have had that much improvement. I think there is more to come and think the 10yr could now trade in the 4.16% range shortly. Mortgage Bonds have pushed up against the 200 day moving average which we have to expect to be rejected at. I have gone back and looked at the last 12 months of data and we have not touched the 200 day moving average let alone broke through it. So while the 10yr is likely going to improve further, I am not sure mortgage bonds will have the same outcome at the moment. I am bullish on bonds for sure but think this may be a good time to lock and take a pause. Tomorrow brings PCE and Unemployment Claims both could move markets.

It is never a straight line up or down.

Bill Ackman, who moved the market when he said just over a month ago he’d covered his Treasury short, is now making a very different bet. The Pershing Square Capital Management founder says there’s ‘a real risk’ of an economic hard landing in the US economy and the Federal Reserve could start to cut interest rates as soon as the first quarter. It’s an out-of-consensus call: traders are fully pricing in a rate cut in June. But plenty of investors across the bond market are positioning for a hard landing and aggressive Fed easing next year.

Home prices rose to a new record in September due to a shortage of homes for sale, even as high interest rates made home purchases less affordable. The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the nation, rose 3.9% from a year earlier in September, compared with a 2.5% annual increase the prior month. The September level was the highest since the index began in 1987. Home sales have slumped from a year ago because higher mortgage rates have pushed buyers out of the market. But the decline in demand isn’t causing prices to fall, because higher rates have prompted potential home sellers to stay put rather than give up the low rates that they have on their existing mortgages.

Consumers Grew More Confident. They’re Not Exactly Optimistic.

The Conference Board’s Consumer Confidence Index increased in November, bouncing back after falling for three straight months. But a measure of consumer expectations remained below 80 (at 77.8) for the third month in a row. According to the business group, levels below that threshold signal a recession within the next year.

Please remain safe and stay healthy, make today great!