Good Monday A.M.,

There is no news today, but bonds are on the plus side. Mortgage bonds are +3bps (hey, we’ll take it) and the 10-yr is at 2.93%. No real reason to float until we see the 10-yr drop into the next channel below 2.90% (and preferably below 2.80%). This week is a little lighter on the news front. Not much until Wednesday with a 10-yr auction then Thursday with PPI and Wholesale Inventories, Friday with CPI is likely the biggest news day of the week.

(CEO of Chase) made some news splashes on Saturday sharing that a 5 percent rate on the 10-yr note was a distinct possibility and said people should be prepared to deal 5 percent or higher. “I think rates should be 4 percent today”, Dimon said Saturday at the Aspen Institute’s 25th Annual Summer Celebration Gala. “You better be prepared to deal with rates 5 percent or higher – it’s a higher probability than most people think”. This despite the 3 percent level still showing substantial support… I had not even thought of a 10-yr with a 5 handle as being on the horizon. That would certainly correct any potential yield curve inversion and would mean the US is remaining on a strong growth track. The other side would of course be interest rates and a 5 handle on the 10-yr would mean rates would be up 2% from where they are now. That could slow housing down quite a bit. Fortunately this is not something that would happen overnight and we would have lots of time to prepare.

That’s it, I wish there was more…

Make today great!