Friday, June 24, 2016 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
By now, if you have not heard or seen the news, the British citizens ignored the political push to keep the UK in the EU, defying the betters and the markets that yesterday were convinced the vote would be to stay. OK, this is old news, but everywhere I am seeing or reading is trying to comprehend how this happened when the markets were leaning heavily the other way.
Yesterday we heard a number of pundits saying, the markets are always right, and yesterday the markets were not concerned with any thought of an exit vote. Global equity markets including the US rallied on the idea there was no way citizens would stand up. Well, markets had it all wrong and yesterday the British people said, we have had enough of losing our independence to bureaucrats in Brussels regardless of what our Prime Minister wanted us to do. A massive shock to world markets and even more of a shock that British people had had enough and they were not going to take it anymore. It is the beginning of the end of the EU as it is presently constituted and managed - and the beginning of uprisings of ordinary people that are yearning for more sovereign independence and distaste of political leaders in the EU.
The Fed saying it is monitoring the situation carefully. The President is saying he respects the vote by British citizens, and recalls when he was in London recently campaigning for keeping Britain in the EU and took a lot of criticism for his interference in another country's decisions.
At its worse the DJIA in overnight trade was down 750 points. Gold up $70.00, crude oil -$3.00. The US 10yr hit 1.46%. Presently, at 10:00AM, numbers are still off but not at the lows before the markets opened. The 10yr is at 1.56%, a little higher yield from the opening of 1.53%, but a "little" different from yesterday's close of 1/75%. The MBSs have had positive strength all day, currently at a plus 70BPS.
By the way, there was some US data this morning that came in soft. May durable goods orders have expected -0.7% declined 2.2%, ex volatile transportation orders, expected 0.0% dropped 0.3%. The U. of Michigan final June consumer sentiment index expected at 94.0 from 94.3; as reported 93.5.
Currently, I am recommending clients to float. However, if you like these rates and you do not want to test the markets anymore, then lock as these rates are very attractive.
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