Good Thursday A.M.,

Equity markets just keep rolling. A late day swing yesterday pushed the S&P over 3k, which took the Dow up another 550 points to 25k+. That 3k level on the S&P is an important inflection point as it is the 200-day moving average. Closing above that for the first time since early March juiced equities even more and we are continuing to see them run today. Big moves like that do have consequences, and we are seeing a bit of that in the Mortgage Bond Market. Mortgage Bonds are down around 30bps from yesterday’s high and about flat from the close. The 10-yr is holding up well, bouncing between .66 and .74 all week (currently in the middle at .70). This seems to be the place the Fed is comfortable and if the Fed wishes it to stay this way, it will. Important data out today. Unemployment claims were a mess with another 2.1mm new claims. The total number of claims dropped a bit by 300k, so clearly businesses are starting to reopen. The 300k drop in continuing claims pales in the face of 2.1mm new claims and 40mm claims on the last two and a half months. Second look at Q1 GDP was a number everyone is and should be focused on. Yes, it is in the rearview mirror but when you consider that the drop in GDP happened in just two weeks of March and wiped out the entire quarter, it seems a little bit of an ominous glimpse into what’s happening in Q2. Markets were expecting the GDP report to stay at -4.8, it worsened to -5.0, Those 2 tenths are a big deal. Durable Goods expected to be -18.2 beat expectations at only -17.2… a solid win? The disconnect between equities and consumer sentiment just gets wider and wider. Something will have to give soon. I am still expecting it to be equities.

Please remain safe and say healthy,

Make today great!