Good Monday AM

After Friday’s roller coaster, which left bonds in better shape despite Fed Chairman Powell acknowledging the Fed could start tapering its bond purchases later this year (which should in theory push rates higher), both mortgage bonds and treasuries are improving again. Today, the only news released was Pending Home Sales and they fell again. Keep in mind some of the factors: low inventory, which doesn’t allow for the volume of transaction, buyer fatigue, seasonality, etc… Nonetheless, the housing market is incredibly active and also lopsided for sellers. I don’t think traders believe the economy is rebounding as strongly as a few of the metrics would indicate and that Covid will still be a lingering ball and chain on the economy. Today the EU recommended a halt to all non-essential travel from the US to Europe. Think about that economic impact. I don’t see where the Fed will be able to taper purchases or raise rates anytime soon. Speaking of data, tomorrow we get Consumer Confidence and Wednesday we the Manufacturing numbers as well is ADP employment numbers, all of which can impact the markets. In fact, every day this week something important is released, with Friday being the biggest with the release of the Non-farm payroll numbers. Unless one of these releases is a big enough miss or beat, we will likely stay range bound.

A little publicized issue is the housing prices to our north. The WSJ shared a little piece on Canadian real estate and how the government is going to work against the market to drive prices down (I’m sure anyone who bought houses recently will be thrilled by this news and vote to reelect the incumbents).

After a decade of trying to keep housing prices in check, Canada’s political leaders have a new tactic: build houses in an effort to drive down prices. The new strategy is unfolding in an election campaign ahead of voting on Sept. 20. Polling among Canadians indicates that housing affordability has emerged as one of the top voter concerns not related to the pandemic. Canada has recorded among the fastest home-price increases in the developed world as it looks to pump up population growth through aggressive immigration targets, Paul Vieira reports.

Please remain safe and healthy, make today great.