Good Monday AM,
Bonds are in flux. The ten-year started at 1.39 traded down to 1.36 and is now at 1.44%. This is a direct result of stocks flying higher. On what, I don’t know. Maybe just buying the dip. Nothing new in the world of Covid yet (other than some Vaccine’s seem to work others don’t, more countries have Omicron and no one knows what Fausti will say next. Mortgage bonds continue to underperform (-20bps) Treasuries which is the worst part of the news. I believe the10-yr we will move down and test 1.34 before the next big pullback, but this is really on the shoulders of what equities will do. There is some encouraging news on rates, which is why I see improvement on the horizon. The supply chain is improving, inflation is showing early signs of moderating and wall street has revised their GDP forecast down for 2022. Also the yield curve is flattening. All of these things are favorable for interest rates. It is also worth noting that the expectation from last week to this week saw a dramatic decrease in the amount of anticipated FED rate increases next year.
Not much economic news on the calendar this week. We will get of course unemployment claims as well as a 10-yr auction with CPI on Friday but not much else.
Please remain safe and healthy, make today great!