Good Monday AM,

Short and direct insight from Dan Rawitch today. The only part I think he missed is that despite equities rising, which would and is continuing to pressure bonds, the Fed is targeting yield so I think the window of where yields on the 10-yr and mortgage bonds could rise to is capped.

The DOW is up AGAIN, this time by 400 points. There are a couple of reasons for the stock market to feel happy, I am not sure either justify making new highs yet again, but it is not for us to figure out. It is our job to read the market and react accordingly. The Chinese market was through the roof last night and this fed the DOW. Also, the ISM non-manufacturing index jumped more than it has, month over month, in 30 years. There are so many mixed messages in the economy and the equity markets continue find the pony the in the pile of poop. I must admit, the technical aspects of the equity markets are bullish, overbought, but bullish none the less. At this point, it would appear that the S&P will test the June highs and if they break through that level, we could test the all-time pre-pandemic highs. You must admit it is puzzling that we could be challenging the all time highs at times of great uncertainty and with millions of people out of work. Anyway, all of this is putting pressure on bonds and I believe we will test the bottom of the trading range. If equities do not chill out, we could see bond yields jump a great deal. Be careful. Pigs get fat and hogs get slaughtered.

Below is an interesting graph on how the recovery is currently proceeding… when looking at this and then the gains in the equity markets, it is just tough for me to reconcile. Fingers crossed we see a more upward tilting recover line. Otherwise, we are in this soup for a while.

Please remain safe and stay healthy, make today great!