Good Friday AM,
Data out today was mostly positive but markets don’t care about the economic data right now. Markets have seemingly taken a breather this week. I am not too unhappy about it either. Equities have paused. Bonds have improved a bit which is allowing for some better pricing than where we have been since earlier in the month. We are now hearing rumblings about the stimulus package being met with resistance. $1.9T after the recent $900b is a tougher pill to swallow than initially planned. I am sure that plan or something close to it will make it through, but how this transpires is likely a looking glass into the next four years.
More about bonds and rates. We are currently in a consolidation pattern, that’s where we get lower highs and higher low in yields. Consolidation can only go on for so long until the there is a breakout due to the converging upper and lower trend lines. You can see this really clearly in the graph below.
On a negative note, this consolidation pattern is resting near the top of the trend channel which could mean higher rates. That said, the Fed is still our friend and IF we can manage to get a friendly break, it means there’s a better-than-average chance of some positive follow-through. I do expect a break out next week and while I am leaning toward it being to lower rates, I think it is wiser to lock today and then float down if the opportunity arises next week.
Two quick headlines:
U.S. Existing-Home Sales Reach Highest Level in 14 Years (the only surprise here is that there was enough inventory to break the record).
RIP Hank Aaron…. I remember watching him play.
Please remain safe and healthy, enjoy the weekend and first, make today great!