Good Monday AM,

No news today and bonds are off from their close on Friday. While the drop is not big, it is enough to kick us off our upward trend line. This concerns me because it comes at the point where we tested the top of the resistance line. As always, the odds are that price does not break above resistance and that it will trade in a range. If we fail to break above resistance, we often move down to test the support at the bottom of the range. It is early in the day and anything can happen, but I am nervous, especially ahead of CPI coming out tomorrow. An overly strong CPI number could hurt bonds. I remain bullish over the coming weeks but short term we could see a pull back.

Federal Reserve Chairman Powell appeared on ’60 Minutes’ last night and shared that the U.S. economy is at a place where growth and job creation could start coming in much more quickly. He said the “outlook has brightened substantially.” The interview was broadcast yesterday, but recorded on Wednesday, the day before he told an IMF panel that he is not worried about inflation risks. I know it sounds counterintuitive that there will be growth but no inflation concerns… keep in mind that growth always accelerates when heading out of a recession (that’s how you get out of a recession) but once prices stabilize (which only take a few quarters), then the rubber hits the road and prices once again stagnate.

There is a 10-yr Treasury action this a.m. in about 10 minutes. We will see how that goes. It will be a big indicator of what markets are expecting from the CPI data tomorrow (markets expect 5% growth, which would be incredible, but I have seen estimates at 11.5%). A big number tomorrow without cooler heads realizing it is temporary could hurt rates short term.

Please remain safe and healthy, make today great.