Late yesterday, sellers were starting to run out of bullets, allowing the market to steady out and start to recover. That trend has continued this morning with the 10 year note currently up 9/32’s (yield 3.86%), mortgage backs up 6/32’s, and stocks up 40 something on the Dow.
Final 4th Quarter GDP was revised lower from 5.9% to 5.6% and Consumer Confidence hit the tape unchanged month on month. Regional Unemployment Rates remained unchanged according to the BLS. The top spots for unemployment were Michigan (14.1%), Nevada (13.2%), Rhode Island (12.7%), California and South Dakota (12.5%), and Florida (12.2%). It’s easy to see that states with a large auto presence and/or states that experienced stealth rallies in housing, leading to a bubble, have been hit the hardest.
Although the market has done better today, the reflex rally has yet to do anything impressive. Typically this leads to a neutral, inside day with the pattern not strong enough to overtake the bearish sentiment of the past two days. Usually, this type of short term bottom leads to a period of stalls and allows the moving averages to “catch up” to the market. We expect that with month end buying, the market could make a run for 3.83% yield on the 10 year note (currently at 3.86%) before rolling over and retesting the bottom ( heading back to 3.93%).
Have a great weekend.