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Market Snapshot 5.10.23- A Gift From Bonds

Good Morning on this best day of the week, Wednesday,

Today we received a gift from bonds. CPI came in as expected month over month but did dip down on an annualized basis below 5% at 4.9%. Still high, the market though reacted positively because most of the CPI increase was from shelter cost. If those were to be stripped out than CPI was actually low. Tomorrow we will get the PPI numbers and I hope they come in low, otherwise bonds could have reverse reaction. The 10yr has dropped back to 3.44% and mortgage bonds are doing well today too. Equities, not so much.

This was a sobering piece from the WSJ (the commentary) :

Prices might not fall significantly on a national basis. The reason: nobody’s selling. Many Americans who want to move are trapped in their homes—locked in by low interest rates they can’t afford to give up. These “golden handcuffs” are keeping the supply of homes for sale unusually low and making the market more competitive and pricey than some forecasters expected.

And as expected…

The saga over the US debt-ceiling continues without resolution, after President Joe Biden and congressional Republicans made little progress yesterday in talks, with the White House saying it will only accept a “clean” no-strings-attached debt limit increase. The President did agree to negotiate on the budget levels for fiscal 2024, however. Biden said he expects the “posturing, politics and gamesmanship” to continue for a while, but intensified negotiations around spending could calm markets ahead of June 1, when Treasury Secretary Janet Yellen says the US risks exhausting its ability to meet its payment obligations. Treasury-bill yields have crept higher, but investors are banking on a deal being reached.

Please remain safe and stay healthy, make today great!