Interest rates are lower this morning after yesterday’s improvements in the Mortgage Backed Bond market.
These improvements came at the cost of the equity market being hit hard yesterday as investors shifted investment dollars to a “safer” bond market. The interesting point about the previous statement is that yesterday’s activity is the opposite of what conventional wisdom would suggest after Standard & Poor’s announcement to downgrade US debt. The announcement should have shifted money from the bond market to the stock market; spiking stock prices and increasing interest rates. Instead, we saw stock prices fall, bond prices increase and Gold increase to a new record. This recent activity isn’t good news for the equity markets and may reveal that many traders believe that the equity market is overbought. We will keep a close eye on both markets in the shortened trading week and remain in a floating stance.
Current Outlook: Floating