13 May Cautious floating bias
Markets opened this morning to positive economic news, as Retail Sales data showed the consumer is alive and well. But, that was not enough to outweigh the Wall Street Journal report from Friday, indicating that the Fed is looking to wind down QE3 sooner rather than later. The recent string of positive economic reports is adding to investors’ fears of the end of artificial support for all the markets. This is also a full week of economic reports with PPI, CPI, Initial Claims, and Consumer Sentiment. Should any of these reports be “too good”, it may not necessarily result in a rally as it would bolster the idea of the Fed winding down. mortgage bonds have shifted from overbought to oversold in a short 8 day price decline. They are trying to find support at this time, and are due for a price bounce. But the move lower has resulted in interest rates being pressured higher. We will start the day with a cautious floating bias.