Good Monday AM,
How’s that Halloween Hangover? A little too much sugar? A little slower today? Yes, those are the questions I’ve been asking myself since 5am. Still working through it.
Dan Rawitch had a good piece with this week being both Fed Taper week and BLS jobs report Friday; I thought I would share his “trader” thoughts. “The market is experiencing some pre-FED jitters. Nobody knows how things will go once the FED actually uses the T (Taper) word on Wednesday. Back in the dreaded 2013 time period, Ben Bernanke, the Fed Chairman at the time, used the T word and caused a HORRIBLE sell off in bonds. HOWEVER, some months later, when the T actually happened, the market rallied. On Wednesday, we will have moved beyond the talk phase and the FED will formally announce the Taper, however, he will not start it until the following month. Bernanke waited several months which is where our pain came from. If history repeats itself, we could see some selling pressure between Wednesday’s announcement and Decembers actual taper. Personally, I do not think we will see selling after the FED meeting. Yes, we may see a knee jerk reaction that lasts for 1-3 days, but after that, the market should be just fine. Bernanke stunned the market with he announced tapering. Powell has been much more careful to set this up. Meanwhile, I expect to be range bound on the MBS between 100.10 and 99.50. We most recently tested the top. We may touch the bottom between now and Wednesday. Weeks like this are hard to predict.
Keep in mind, once the dust settles from Fed Wednesday, we then roll right into Jobs report Friday which while may lose some luster after Wednesday’s expect volatility, will still drive markets.”
How about this surprise at one of the happiest places on earth (I guess maybe not so happy in a communist country)? The continued fight against the pandemic was made clear over the weekend in China when authorities locked thousands of visitors to Shanghai Disneyland in the park to carry out tests. Hong Kong will end quarantine exemptions for most groups from Nov. 12. The city reported slower-than-expected growth in the third quarter as it kept its borders largely shut.
Please remain safe and healthy, make today great.