Meant to post this at the end of Friday 8/13!!
Both bonds and stocks finished on the plus side today. Not bad considering another batch of soft economic data and it being Friday the 13th. Speaking of data and events, the entire week was glooming starting with the Fed admitting (in so many words) that a second round of treasury buying is needed, Productivity slipping, Weekly Unemployment Claims rising, Retail Sales up but below forecast, CPI a non-event, Michigan Sentiment better but still below 70, and the Philly Fed downgrading their outlook for that region. No wonder stocks took it on the chip and bonds, notes, and mortgage backs look like the Eveready bunny.
After yesterday’s selling, the 10 year note rebounded nicely, up 15/32’s on the day. The week is ending with all time frames, daily, weekly, and monthly looking like 3 bulls in a china shop. All ready for continued action. Conditions favor continued bullish price action (Austin mortgage price improvement) but probably at a slower pace. Reason being is that we’re in the 10th consecutive week of positive price action on the weekly chart. Something that is rare to see (8 weeks or more).
With so much doom and gloom built in, the sledding towards lower yield will become more difficult. Just the same, the trend will be persistent and keep the market neutral worst case into next week. Only a reversal in stock or economic sentiment will get in front of this bull.