Stocks have determined the direction for Bonds of late and last week's Stock tumble helped Bonds improve. With little news to influence Bonds until Wednesday, Stock prices could resume their position big dog.
Should Stocks bounce and rally, more money will flow out of Bonds and into Stocks, causing Bonds to worsen during the day. But a break below the 200-day MA in Stocks will accelerate the selling causing Traders to scoop up Bonds and help Bond prices improve.
The Fed Meeting on the 31st of October and chances for another Fed cut are increasing. The US Dollar is rebounding, which gives the Fed more of a bias towards a cut.
Bonds are having a tough time moving through overhead resistance and have pulled back on some profit taking as Traders position themselves with cash positions to dive on a Stock market rally. We feel that lower mortgage rates will occur if Stocks fall beneath their 200-day MA.
For today we recommend a cautiously floating position today waiting to see which way stocks break.
Throughout California, if you are in any area where there is smoke. Try to stay inside, limit your outdoor activity and keep you windows closed.
Thank you for listening and we will have another report for you tomorrow.
Roger Herrick your California Mortgage Broker can be reached at 888-619-9044 and on the web at www.contactherrick.com
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