This market report will provide the data and insight from trading on Wall Street. Interest rates are derived from the yield on mortgage backed securities (bonds). When the pricing of mortgage backed securities (MBS) goes up you can expect lower interest rates. When MBS pricing goes down, expect higher pricing on interest rates for home mortgages.
Quiet start to the week with stocks down a dozen, 10 year note up 1/32nd to yield 1.88%, and mortgage pricing up 1 to 2/32’nds. The only data out today is Consumer Credit, expected to be up 1 billion for March. Most of the news centers around Europe where Hollande (Socialist party) was elected as the new President of France and Greek Parliament votes are clearly in favor of “anti-bailouts”. The bottom line here is a rejection of Austerity and therefore, a rejection of Germany. Most likely this will not end well as long term economic growth will be a struggle. France is already at 56% spending to GDP and Greece at 49% spending to GDP. Look for the new rulers to pull the wool over their own eyes, refusing to cut government spending and hoping for the best. They are making traders very nervous.
The week ahead will be light on data with Weekly Unemployment Claims (Thursday) and PPI (inflation data) on Friday being the big market movers. Technically, we hit our target early this morning (before stateside markets opened) at 1.82% on the 10 year note. Market could not hold that level and has slowly slipped back to unchanged at 1.88%. We like the market but at the same time feel it lacks momentum. That is a concern and typically leads to reversal patterns. We suggest to lock em’ in at some of the best levels in history and get to the sidelines.