Good Wednesday AM on this best day of the week,
Here we go again with more weakness in bonds. We just cannot catch a break. The 10-yr treasury is now at .81 and mortgage bonds are below support. If this slide doesn’t stop here, it will likely run the 10-yr Treasury to .90. The. Equity markets are flat as they wait and see and hope for further stimulus. Bonds are typically a step ahead and are likely pricing in a stimulus deal. If we get one, we could see a buy the news rally. This is and has been a duck and cover drill. One more point is that while any move up in rates is panful, we are still very much in bullish territory and rates are incredibly low. This move up is minimal and likely temporary.
The WSJ shared an ominous point that I hope is not foreshadowing, The size of the U.S. labor force shrank in more than half of the 30 states that saw unemployment rates fall last month, with declining jobless rates helping to mask the labor market erosion. At this point, economists say, businesses have largely hired back workers who were laid off or furloughed at the start of the pandemic, and most companies aren’t likely to invest significantly in hiring more people until the threat of the pandemic has passed. People are dropping out of the workforce for a variety of reasons, though certain factors like school closures, which could force more women to stay home to care for children, could be playing a role.
How about this… $59 billion — the budget shortfall facing New York state governments and agencies through 2022. Gov. Andrew Cuomo said that without an influx of federal aid directed to states and governments, New York would be forced to raise taxes and cut services.
Please remain safe and healthy, make today great!