Happy Wednesday Afternoon,

Lots of data today which was 2-1 in  favor of bonds. ISM was week and Construction spending worse but ADP payrolls was the hold out and was super-strong.

None of that mattered for the most part as the real deal for the day was the 11 a.m. FOMC meeting. Bonds started off in good shape and held their gains until Mr. Powell talked about the economy being stronger than it really seems to be (not sure what he is looking at, but he is smarter than well, most of us are) and took a more hawkish stance during his fireside chat than markets anticipated. No change to the Fed Funds rate but bonds sold off on the verbiage. The best place to see the movement is in the 2-yr treasury note which started the day at 2.26% and ended at 2.31%. When it comes to mortgages we aren’t really so worried about the 2-yr note to begin with, as we are more focused on the 10-yr note and mortgage bonds which stayed positive presumably because of the selloff in stocks. The Dow sold off 163 on the day. End of the day call, but likely good idea to lock this afternoon.

Make today great!