Here’s the problem. When rates are falling, there are more sales, and especially more refi. So the prepayments go up, and the Fed sees a greater reduction in its MBS holdings. Those reductions had been running at the rate of $65-70 billion per month through last month, based on the prepayment rate in the market in prior months. The Fed then bought that much from the dealers in the following months.
I hope you had a wonderful Thanksgiving. In bear land, we would have preferred Tanks Giving. But the market doesn’t seem to want to do any tanking.
Thanks to Lindsay Williams at Strictly Business.
Other than anything I say, the fiscal games that the Trump Regime is playing on its way out. Here’s why, along with what to expect in today’s US stock market trading patterns.
The market started a baby downtrend channel last week. The top of the channel will open on Monday at 3572. Here in the premarket around 5:30 AM in New York, that trendline was being challenged as, once again, Asia and Europe have rallied. This report shows you what to look for this week as it affects the longer term outlook.
Yes, they are. They have come back to celebrate the holiday.
Jay Powell’s first order of business is to keep the bond market from breaking down. When the 10 year yield hit 0.975 last week before backing off, the market was at the edge of the abyss. Leveraged dealer bond portfolios were on the brink of disaster.
It won’t be safe to trade until the market gets through certain levels, one way or the other.
Nice little pullback yesterday. But 3540 and 3520 on the ES are both important support levels. We should see a bounce from one of those. And if not there, then major support at 3510. I wouldn’t get too excited about this pullback unless they take that …
Dare we dream? Two straight down days? Nah.