Mel's Blog

Mortgage Bonds are flat this morning, even as Stocks are headed higher.  In yesterday's update, we discussed the implications of the Japanese Yen moving higher against other currencies, which in turn had sparked a sell-off in our markets.  But this morning, the Yen has backed off a bit, hence the nice move higher in Stocks.

If you remember the movie "Nightshift", the classic line was "This is Chuck to remind Bill to shut up!"...and you can't help but think that this is just how Ben Bernanke must be feeling, as former Fed Chairman Alan Greenspan, who recently turned 81, has been grasping for face time in the media, spewing contradictory remarks to those of the current Fed Chair.  In an interview with Bloomberg, Mr. Greenspan is saying he expects a "one-third probability" of a US recession later this year, and that the current expansion won't have the staying power of its decade-long predecessor.  

After a wild ride, Bonds have been very quiet over the last four trading sessions, and are smack in the middle of a ceiling of resistance and floor of support.  Of concern is the "overbought" position that Bonds are still in, which can be clearly seen on the stochastic indicator on the Bond Page.  This position tells us that when the market does make a sharp move in reaction to news, a move to the upside will still be favorable, but could be somewhat muted - while a move to the downside may be exacerbated.