After several weeks of economic announcements generally exceeding forecasts, weaker than expected labor and manufacturing data, along with comforting comments from Fed officials about inflation, helped mortgage markets this week. Reacting to the data, investors shifted funds out of the stock market and into bond markets, and mortgage rates ended the week at the lowest levels since May.
Cash seeking a return and/or shelter from our wicked world once again is running to Treasuries. The trade however has been on both sides of unchanged due to all of the above. Stocks have moved from red to green and back to red again, currently off 19 points on the Dow. The 10 year note is up 5/32’s, trading at 3.35%. That level is significant as referenced in yesterday’s Market Update. Any close below 3.36% will shift the advantage to the bulls. Given the “outside day down” on the S & P chart Wednesday, along with continued pressure yesterday and today, we could be seeing the beginning of a nice correction in stocks.
