Good Monday AM,

Short and sweet from Dan Rawitch today: “Bonds are flat this morning. We expected this as the charts are not demonstrating any desire to break in either direction. We did test the top of range on the ten year and failed. I would expect as to slowly fade toward the bottom of the range. Mortgage bonds are currently caught between two moving averages, the fifty day and the 25 day. It is crucial that we remain above the 50 day moving average. At this point, either the 50 DMA will rise up and force price above the 25 DMA or the 25 will bend lower and push price below the 50. The news today was light with NAHB coming in as expected and the Empire Manufacturing number missing expectations. That’s it for now expect sideways with a slight downward bias, unless we see an external catalyst come into play”

An interesting commentary from the WSJ on inflation… bottom line, I wouldn’t be too worried about it.

Just how much inflation would it take for the Federal Reserve to abandon its commitment to super-easy money and begin to talk about tightening? Markets think the answer is that the Fed will accept far more than consumers would like, and the market is probably right: Inflation could easily be at 5% early next year without prompting any change of strategy. So long as the Fed expects inflation to come back down and investors and workers have faith, it is under no pressure to move. The danger is that high inflation shakes that faith. Core inflation hasn’t been above 5% over a 12-month period since 1991. My concern is that the Fed loses credibility, which means higher and more volatile bond yields, hurting the price of pretty much everything else, and risking a self-fulfilling rise in inflation expectations, James Mackintosh writes.

Please remain safe and healthy, make today great.