Good Wednesday A.M. (that was quick..)
Bonds took a hit to start the month and the positive spin I guess is, things didn’t get any worse today (yet)… At 2.90% on the 10-yr, bonds are seesawing on the line of support. If we close into the 2.90’s, that is a bad sign as the expectation would be a quick ride back to 3% so 2.90% is an important line in our sandbox. Mortgage bonds equally unmoved today are flat, really flat… like zero. Stocks are improving (don’t call it a comeback, they’ve been here for years) after following European shares lower overnight. There was a sell-off in Asia (from Bloomberg as I don’t write this well), “as enduring pressure in emerging markets intensified concerns of contagion. With investors seeing no let-up in trade tensions, the dollar strengthened for a fifth session and commodities slipped, led by oil. Futures on the S&P 500 pointed to losses after the Stoxx Europe 600 Index dropped to its lowest since April before paring some of the decline. A day after developing-market currencies tumbled, it was the stock market’s turn in the hot seat. Shares slid from Japan to Australia and were bruised most in Indonesia, where the nation’s benchmark lost almost 4 percent”. The point is global growth is not looking so assured. The lock call today is easy. Lock and float down. Any additional losses in bond prices will push the 10-yr into the next trading channel. Float down if bonds decide to stay and fight it out.
Make today great!