The bond markets are rallying nicely this morning and it appears at least for today, we are taking the day off from our bond selling bloodbath. The 10-yr down to 1.55% from 1.60% yesterday and mortgage bonds are also doing well. The stock market is also rallying with the Nasdaq recovering all of yesterday’s losses. For now, it appears the Nasdaq and bond market are attached. A continued rally in both would be nice. Despite today’s bounce, please keep in mind that the volatility is still very high and the markets are extremely unpredictable at this time. The House will likely approve the $1.9T stimulus package (maybe as soon as tomorrow). I am cautiously bullish short-term for interest rates. This week we get both PPI and CPI, if the inflation gods are kind and the number is tame, expect a continuation of today’s bullish move. If not, we will see rates run up further. We also have three Treasury auctions this week with tomorrow’s being the 10-yr auction (that one means the most to mortgage rates). Fingers crossed for weak inflation and strong auctions.
Please remain safe and healthy, make today great.