SOMETHING needs to come along and break the monotony today! I mean, violent financial sector convulsions hardly classify as "news" these days, right? I think the teleprompters as CNBC and Bloomberg have "more bad news from the financial sector" pretty much burned in at this point.
I'd be surprised if anyone is surprised by the raft of bad news from financials today. The word "duh" comes to mind. When banks stop losing money at faster than expected rates, THAT will be news.
Then, there is a small raft of underwhelming headlines to digest such as commodities falling faster than almost any other time in history, dollar strengthening, trade gap shrinking, what else? Does anyone care? It certainly doesn't seem so.
We even had one divergent report today. The IBD/TIPP Economic Optimism Index rose 14.4% to a six-month high of 42.8. That was the largest month over month gain since November 2005. Given the fact that this index has a very reliable predictive ability for the University of Michigan survey, we'd normally expect to see some weakness in fixed income and some strength in stocks, but nope!
MBS and treasuries have simply begun a slow, sober, and steady march upward with the 6.0 up 7 ticks at 99-24. Keep in mind this feels a bit lower than it should be because the August coupon settled yesterday, so the new current coupon is september. Since September was a slightly lower price than August, it always creates a "speed bump" for MBS that can take a day or two before showing us whether or not we're in better or worse shape than Friday.
I wish there was something more exciting to discuss. Well, maybe there is one thing, but it's a bit premature. In a nutshell, our previous market bottom was soundly at 99-00 to 99-01. We had 3 days bottom out right in that range in the last 30 days. Our most recent low however only tested the 99-19 area. If we can continue to stay out of that range for a bit, this could be the "higher low" we're looking for that would signify the beginning of an uptrend out of the summer doldrums. If this materializes, we'll get you a marked up chart so you can decide for yourself.
If the prospect of a noncommittal .2% rise in core CPI feels low to you, consider locking this afternoon. But as long as you stay tuned for intraday turbulence, just think of us as your airline seat cushion! Rely on us for flotation, and we'll keep you above water if the plane goes down. We're floating.... Reassessing at lock cut-off.