Good Morning on this Best Day of the Week Wednesday,

What’s news today…

• Joe Biden has given the nod to Kamala Harris to be his Vice Presidential Running Mate. Interesting choice, as she was not too kind towards him during her run for the presidential nomination.
• CPI came in hot, too hot for where the economy is. I suspect this anomalous report will smooth out.
• Russia swearing by their untested vaccine.
• 10-yr bond auction coming shortly.

Stocks up big yet again with nothing seemingly able to slow that advance. Bonds, on the other hand, have been trading with a more normal correlation to the equity markets. Stocks advancing typically causes bond yields to rise. The 10-yr was at .50 just a week ago, today, we are at .67%. We are likely to leak a little more to maybe .69 or so, then see some rebound. It will be a bit of a haul to break through .58 again, but I have faith we will. Mortgage bonds are off 30bps today on top of the 20 from yesterday, so that tells you how mortgage pricing is going. Often times when we see big sell-offs, we see emotions kick in and weak hands will continue to shed what they hold. Soon, the stronger hands will come in and start gobbling up the bottom until we find support. We currently sit at the Fibonacci 50% retracement level. We should hold but if we do not, we will test the 62% retracement level. Despite pricing having taken a gut punch, floating here is dicey as this could get a bit worse prior to getting better. The results of the 10-yr bond auction should be out in 30 minutes or so. The market may take some direction on those results.

Here is a sobering thought from the New York Times: without  an extension to the $600/week bonus unemployment, some 30 million to 40 million people are at risk of eviction. The projections right now are so bad, we run the risk of over-hyping it and then not appreciating how bad even a fraction of that could be. If the number of evictions grows to two or three million, that’s still doubling or tripling the current figure.

Please remain safe and stay healthy, make today great!