Good Morning on this fantastic Thursday,
The data deluge continues this week. For the most part (other than import prices) it was all in line (data below).
- Unemployment Jobless Claims: Actual 226K, Consensus 230K, Last 231K.
- Philadelphia Fed Index for Mar: Actual 22.3, Consensus 23.0, Last 25.8.
- Import Prices for Feb: Actual 0.4%, Consensus 0.2%, Last 1.0%.
- NY Empire State Index for Mar: Actual 22.5, Consensus 15.0, Last 13.1.
- NAHB Housing for Mar: Actual 71, Consensus 72, Last 72.
Stocks are screaming back with the Dow +253. It’s a little murky why for me and when I can’t pinpoint a specific reason, it comes down to the basics of supply and demand. It could just be that equities have fallen enough that some people want to buy. Lots of smart people sharing their insight about why… Larry Kudlow is the new chief Economic Advisor who is down on tariffs, but so was his predecessor Gary Cohn, who resigned over them (and it didn’t move the Trump needle). Maybe it’s the too-close-to-call midterm election in PA where the Dems took a seat from a red county Trump won by 20 points in 2016. Who knows? The good thing for bonds is, so far, there has not been much corresponding selling. The 10-yr still hanging at 2.82% and mortgage bonds -4bps. To spark a mini rally, a close below 2.80% is needed, and as long as we stay below 2.84%, we shouldn’t see too much selling pressure. The Fed meets next week and will raise the Fed Funds rate by .25% on Wednesday (high 90% probability). It has already been priced into the market. The unknown is how the Fed will interpret the recent data points and what the forecast will be for future hikes.
For today, I would probably hold on to locks to see where we close but if the market starts slipping, I would pull the trigger quickly.
Make today great!