Monday, April 11, 2016 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
US stocks were better right before the open and after the bell continued until the last hour where we have seen a little bit of a retreat. Why do I mention this right off is that it seems like the stock market's direction has been coinciding with the direction of where the bond and mortgage securities have gone. Each started off weak, but have now come back in line where we have the 10yr at 1.72% from the open of 1.74%, and MBS are flat at 10:00AM while I write this report. Hence, even with the mortgage rates coming out on the weak side this morning, I feel that they will turn around to an even keel from Friday.
This is a busy week for financial markets, as key economic data, multiple Fed speakers and Treasury will sell $56B of notes and bonds. US equity markets a little better following improvement in Europe's markets. Have not seen a lot of data from China recently as their economy is not doing well.
There are no economic releases scheduled today. Today though is the beginning of Q1 earnings season that will go one for the next month. Most of the stuff I am seeing and reading is that Q1 earnings may in total be weak.
A number of key economic reports, Treasury auctions, at last seven Fed officials and the beginning of earnings season combine to make this week a difficult one to access. The data is key with inflation data, reports on industrial production and March retail sales. Crude oil this morning trading over $40.00, what many see as a support level - OPEC will hold a meeting beginning Sunday still talking about a production freeze. The bond and mortgage markets continue to hold bullish techs but this week will experience increased volatility.
Floating this week should be considered carefully, as I do not want to be as aggressive in floating as in previous weeks. The 10yr has found resistance at 1.70% and not likely to break through it with the calendar and Fed speakers. So far today, I am still floating but watching the market closely. If there are any changes of a significant substance, prices now are attractive, but only float if you cannot afford to lose.
Most likely this evening's report will be very late at today is Opening Day for my favorite team, the St. Louis Cardinals. Needless to say I will be monitoring as best I can if anyone has any questions. GO CARDS!
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