Iranian War Threats Subside

Iranian War Threats Subside

Last night’s Iranian attack on a two Iraqi bases that house US troops certainly put markets in a panic.  At one point, the yield on the 10-Year Treasury Note plummeted 10 basis points and the Dow Jones was down 400 points as investors feared a US military attack in Iran.  However, as news of a more level-headed approach from President Trump hit the wires, the stock market came roaring back and yields on the 10-Year shot higher.  Since this morning’s Presidential address, stocks have blasted to new all-time high records and mortgage interest rates have moved higher.  If the tensions between the US and Iran settle, we can expect upward pressure on mortgage interest rates.  However, if tensions again heat up, we can expect the opposite.

 

This morning’s ADP report showed that there were 202,000 new jobs created in the month of December, which was better than the 157,000 expected.  Adding to the strength of the report, November’s numbers increased by an additional 57,000.  We will receive the more important Bureau of Labor Statistics (BLS) report on Friday.  That will provide the details showing from what industries the job gains are allocated.  I expect much of them to come from the retail sector, as stores added staff to keep up with the holiday shopping demands.

 

Given the strength of the stock market, we maintain a locking bias.