Easy Go, Easy Come, Markets Thumb Their Nose at Powell

Actually I don’t think investors and markets are thumbing their collective noses at Jay Powell – more like yesterday was a reaction that maybe wasn’t warranted. Not that the sell off yesterday was all that bad–certainly we have seen much worse in the past, but one should actually think before buying or selling–sometimes a novel idea on Wall Street. Today we see the S&P500 up almost 1% which recoups much of the loss yesterday–but I wouldn’t be surprised at all if this markets drifts lower through the month. The tone for tomorrow will be set by Apple which reports tonight–let’s hang our hat on 1 company (just kidding).

Economic numbers released today showed some softness–higher initial jobless claims, higher ongoing unemployment, which were kind of offset by hotter manufacturing and stronger construction. Let’s just say ‘more of the same’–mixed.

The 10 year treasury is trading at 3.87%–down 9 basis points on the day. Sharply lower rates are not doing much to push prices of preferreds and baby bonds up today–rates and prices have disconnected the last 10 days or so as a rush to lock in some yield created high temporary demand. Will prices continue higher? I think for the next month or two we will need to depend upon getting the ‘juice’ from dividends and interest payments–not from capital gains. Higher prices will come, but the next push may well be delayed until the Fed starts to cut.