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Taper is Bond Bullish

Most investors believe when the Federal Reserve tapers its balance sheet that it means interest rates are going to rise. Yet, something peculiar happens when the Fed reduces its monetary support for the economy as interest rates tend to fall. At the end of Quantitative Easing 3 in 2014 and later in 2017, interest rates … Read more

Market Brief – Thursday 12/30/21

Stocks started the day slightly higher and headed higher in early trading. Treasury yields fell in overnight trading and were slammed back higher in early trading. Initial unemployment claims fell slightly to +198k and total claims, including all forms of Pandemic Unemployment Assistance, rose +39k to 2.177 million. Stocks and Treasury yields closed lower on … Read more

Market Brief – Wednesday 12/29/21

Stocks started the day higher and Treasury yields were slammed higher in overnight trading. The trade deficit widened to -97.78 billion in November, the largest on record. Retail inventories excluding autos rose +1.3% and wholesale inventories rose +1.2% in November. Pending home sales fell -2.2% in November and +0.2% from this time last year. The … Read more

Market Brief – Tuesday 12/28/21

Stocks rose in overnight trading but started to give back some of those gains in early trading. Treasury yields fell in overnight trading but sellers were quick to push back in early trading. Home prices rose +1.1% in October and +17.4% from this time last year. The Richmond Fed Manufacturing index rose to 19 in … Read more

Market Brief – Monday 12/27/21

Stocks started the day higher as investors bought into a late Santa rally. Treasury yields dipped in overnight trading after 30-year Treasury yields ran into a wall at 1.9%. Stocks continued their rally in early trading while Treasury yields fell slightly in early trading. Today’s $56 billion 2-year Treasury Note auction was met with strong … Read more

Financial Conditions Are Tightening

Retail investors continue to eagerly buy every dip or decline in stocks in hopes that stock prices will soon make new all-time highs. While they are throwing money at stocks, they cannot see the warning signs that financial conditions are tightening. When financial conditions become too tight, risk assets tend to crash. Investors are willfully … Read more

Market Brief – Thursday 12/23/21

Stocks rose in overnight trading and continued higher in early trading. Treasury yields were flat in overnight trading and were immediately slammed higher in early trading as sellers were aggressively taking advantage of light trading. Initial unemployment claims were unchanged at +205k. Total claims, including all forms of Pandemic Unemployment Assistance, fell -320k to 2.137 … Read more

Market Brief – Wednesday 12/22/21

Stocks were flat in overnight trading while Treasury yields fell. Stocks rose in early trading and Treasury yields rose slightly in early trading. Mortgage applications fell -0.6% last week as purchase applications fell -3.3% and refinance applications rose +2.2%. The Chicago Fed National Activity Index showed the national economy expanded at a faster rate in … Read more

Market Brief – Tuesday 12/21/21

Stocks rose in overnight trading and after a brief move lower, shot higher in early trading. Treasury yields fell sharply in overnight trading and extended their overnight decline into early trading. Today’s $20 billion 20-year Treasury auction was met with strong demand as foreign bidders took 64.8% of the auction and domestic bidders took 20.8% … Read more