Mel's Blog

Today we have switched our focus to the 6% Coupon Bond as it is more indicative of where home loan rates are currently.  The 6% Coupon has been moved to the top of the grid on the Bond Page and your text messaging will now reflect this change.

Bonds are under selling pressure after Fed member, "Three Swing" Charlie Plosser had some tough words to say about inflation and the Fed's role.  Looking like he took a page from our update of two days ago, he said, "Monetary policy is quite accommodative right now, inflation is on everybody's mind...We have to take appropriate steps to do something about that."  What are those appropriate steps?  We think it is to hike the Fed Funds Rate sooner rather than later.  

Also adding pressure to Bonds was a surprisingly good May Retail Sales Report, which came in double expectations at 1%.  Excluding autos, sales rose 1.2%, the biggest rise in six months and well beyond the 0.7% rise economists were expecting.  Adding more strength to the report, were upward revisions to the previous month's figures. 

Initial jobless claims jumped to 384,000, well above expectations of 370,000.  Stocks shrugged off this news and after a couple of miserable days, they are trading sharply higher.

Technically, the Bond is teetering on support at the $100.03 level.  On new transactions we can carefully float and see if support holds.