Highly Volitile Market

Markets opened up with a continuation of the slide lower, as China has become the most recent catalyst to invoke fear.  The Shanghai Composite dropped 5.3% after China’s largest bank indicated that there may be a credit crunch right around the corner.  The index is down 13.5% for the year, indicating that China’s economy may be in for a very rough ride.  It looks like the chance of cheap lending is drying up in other parts of the world as well.  mortgage bonds remain in a free fall, which pushes interest rates to a high we have not seen in well over a year.  We can start the day with a cautious floating bias, as bonds have pared a good portion of their earlier losses.