Good Monday AM and Happy Valentine’s Day,

The ten-year is back up at 2% after briefly falling to 1.96 on Friday. The huge drop as you know was the imminent invasion of Russia into Ukraine. At this point if there is an actual invasion, which does seem highly likely, bonds will likely rally much further and stocks will sink deeper into bear market territory. The equity markets have bled trillions of dollars of household equity so far this year and we should prepare for more damage. It will not take much more selling to reverse the economy, especially when you consider the pain inflation has caused. Fed President Bullard is still spewing his opinion about the need for much higher rates NOW, as opposed to small increases this year. The last thing these markets need is more opinions flying around from a Fed. He should shut up and realize his opinion had never influenced the Fed but it does influence the markets. Higher rates will not stop inflation, but they will slam us into a recession if we are not careful. So many things in the air that will likely keep bonds elevated over the short run but also could spark a rally soon. By soon I am thinking 2nd quarter, after we see the Q1 GDP numbers.

Please remain safe and healthy.