Good Thursday AM,
Lots of news out in the last 24 hours. The Fed statement and Q&A yesterday was dovish.. Economy under stress, underperforming and rates will remain low with the Fed buying bonds until things get better. Again, both stocks and bonds loved that line of thinking. And why not, low rates are great for mortgages, auto loans, consumer loans, credit cards and business loans. The stock market jumped on the news as well. The Fed is really doing a great job navigating this meltdown we are having. Today we had a glimpse of just how bad things were in Q2,. The GDP was -33. By far (by double) the worst reading the US has ever, ever, ever seen. On top of that, unemployment claims out this am exceeded expectation at 1.43mm new claims. Equity markets looking at the data and rethinking yesterday gains. The Dow was down 500 at the beginning of the session and has clawed back to -200. The bigger win though is the 10yr at .55% (broke through resistance and still improving). Mortgage bonds also have a good day although not as good as Treasuries. For this breakout in Treasuries to be an indication of better rates in the future, we would need to see two consecutive days closing below .58%. Hopefully today is day 1 and then tomorrow, the last day of the month, can be day 2. For now, I think we ride this wave and be prepared should we see more selling than buying. If the 10yr heads up to .58 or higher, I would lock.
Congress is hard at work trying to find an acceptable solution to the expiring bonus unemployment coverage (which expires tomorrow). This map shows where the loss of the extra $600 in unemployment benefits will hurt the most.
Please remain safe and stay healthy, make today great!