Good Monday AM,

Not much data out this week.

Bonds are still weak despite some very good economic news last week.

Traders are seemingly buying into some hawkish comments from the ECB. Today the news was a nothing burger which can be said for most of this week. This leaves things up to the charts and the charts do not look good at the moment. The ten-year failed to stay below 3.50 and this will likely take us up to 3.65%. Mortgage bonds are also having problems and could drop another 40bps before hopefully catching a bounce. It is difficult to advise anyone right now because the market is not making sense and my crystal ball is not good at reading crazy,

Some interesting snippets on where the economy is.

Hedge funds are betting the dollar is about to reverse its longest stretch of weekly declines in almost three years. Leveraged funds were net short on all major currencies against the dollar last week for the first time since January 2022, according to the latest Commodity Futures Trading Commission data. These wagers notched a win on Friday, after Federal Reserve Governor Christopher Waller said he favored more rate hikes to combat persistently high prices.

Another why of why the Fed can’t raise rates much more without breaking the back of the economy.. Look at the interest expense.. there is no way to service this debt over a longer term.

Here is a chart on what happens when the 2 yr – 10yr spread is inverted.. That is the first whistle to blow on the recession train. The second and final whistle is when the spreads widen and are no longer inverted. Keep an eye on this spread (also called the Ted spread)

Not a good time to own a brick and mortar retail store.. That red line is no fun and no joke.

Please remain safe and stay healthy, make today great!