Good Tuesday AM,

Bonds are doing well this morning. This is providing a nice lock opportunity for those that do not want to float through the FED meeting. The meeting tomorrow is very important and we do not know how the market will react. Over the last year or two, most of the time, the market sells off badly following the meeting and then in the following days, it repairs itself and often finds new highs. We do not know whether or not the taper announcement will cause a different reaction. We do know that nobody will be surprised, which in itself suggests the market will not care. However, we do not know what Powell will say about the overall economy, the supply chain or inflation. We also do not know what he will say about future tightening. Remember, tapering is NOT tightening. Even post taper, the FED will still have a net accommodative stance. As you know, I am not a fan of floating into big unknown situations. In my opinion, it would seem that with everything going on, we will see lower rates going into next year. Does that start now, or do we first see a sell off? Fortunately, we do have some time in the am before the Fed announcement to see how markets are leaning.

Once we get through tomorrow we still have the backside of the gauntlet to run with the jobs report. I would expect it to be stronger than last month, but we will see.  This report comes out at 5:30 Pacific time, so it is over before it starts.

The fun starts now…

Please remain safe and healthy, make today great.