Good Monday AM,

Thank you to Dan Rawitch for a few colorful words on this fantastic Monday.

Holy Cow Batman! Bonds are on fire with the yield now down to 1.18% on the ten year! MBS is up 50 bps and that is after a big gap up. I mentioned last week that the market would need some sort of a catalyst to break us out and we got it! The catalyst is flight safety as stock investors rush out of stocks as the DOW is down over 700 points. Bonds are the common hiding grounds for equity investors to run to when there is fear in the market. Keep in mind that moves this strong are often followed by pull backs so do not get greedy here. I am and have continued to be bullish on bonds, but I never turn my back on the market when the waves are this big! There are no big ticket events on the econ calendar for Monday, and the rest of the week is mostly focused on housing.  Broader markets will be more interested in central bank updates.  The European Central Bank (ECB) releases its policy announcement on Thursday.  European yields have been correlating very well with US yields and stock prices. The next leg lower on the 10 year treasury which will drive mortgage rates lower still (assuming we close below 1.21% for two+ days in a row) is .99%. WOW. Let’s keep an eye out for how we close today. If we leak at all, it is likely a good idea to lock in today’s gains than risk giving some back tomorrow.

Please remain safe and healthy, make today great.