Bonds are stronger today, although they’ve given back some of the gains that were intact at the end of the European session.
Europe figures prominently into today’s strength with the ECB Announcement and press conference being even more bond-friendly than expected
Big traders loaded up on bonds and sold stocks just before the 10am hour
Bond yields and $/Yen hit the lows of the day at 11:20am and have been been bouncing higher since then
Yesterday’s Huddle focused on the herd mentality believing in higher rates, and the resulting opportunity for ongoing strength. Same story today. Most people think we HAVE to bounce soon. Maybe we will, but force the market to prove it before you jump on the bandwagon
Today’s Data, Headlines, and Scheduled Events
Jobless Claims 298k vs 241k forecast due to Harvey (not a market mover)
Labor Costs 0.2 vs 0.3 (not a market mover)
ECB press conference update (read it here)
US bond rally update (read it here)
Long-Term Lock Strategy and Market Themes
“Sideways-to-slightly lower” theme in 2017.
Fiscal and geopolitical risks can cause unexpected volatility
Ranges have been narrow and reliable, so we can watch technical levels to assess trends
Red flag levels are around 2.3 and 2.40% in the bigger picture.
Short-Term Lock/Float Strategy
Volatility has been lower than normal and lenders have been slow to adjust rate sheets. That means lower risk/reward for locking/floating.
Short-term, risk-averse scenarios should continue to lock the best levels of the year, or at least set a low lock trigger ceiling (like 2.07%)
Moderately risk-tolerant clients can watch 2.09 or 2.12% as excellent overhead lock triggers. Don’t panic at the first sign of selling. Force the market to break a technical ceiling before reacting.
Aggressively risk-tolerant clients have been floating since early July and can set their lock triggers at 2.16% or even 2.22%.
Technicals/Trends in 10yr (why 10yr?)
Ceiling/Support (can be used as “lock triggers”)
2.035% (intraday lows)
1.99% (low yields from the day after the US presidential election)
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