Wednesday, July 09, 2008
Iran would test a missile that would reach Israel? Really?... Although I don't see the surprise, investors did and retreated from the Dow today. They initially moved to oil, but then the Bond Gods shined down and gave us a massive drop in the Dow and oil seemed to settle. Finally, the market is moving like it is supposed to do. When worries arise, the bond is the safety net everyone climbs under. Although the FNMA 5.5% is only up 42 Bp, the real test is that it passed the 50 day moving average. Without much meat in any economic news this week, global threats, recession fears, and banking issues are going to be the big market mover. As long as the FED reassures investors that they will do what it takes to help the mortgage crisis, the bond should hold. We have a long way to go till 5.5%, but 6.125% on a 30 yr FHA will keep my clients happy. Although most are calling it a strong float day, I prefer the word cautious, as emotions, like small children, are given to tantrums.
Karl Menzer
435-849-0212
