Inflation Ticks Down while Initial Claims Rise

The stock market continues to rise this morning on improving inflation figures that we will get to in a minute! As we have said, the stock market is not a reflection of the economy in general and that is especially true in 2020 as armature traders are setting record trading volumes. Despite the election debacle and the country shutting down once again, over 26 billion shares were traded in the last 2 days as the Dow topped out just above 30k. This is a 72% increase in trading volume from these days last year when the market had much more tangible value.

Moving with last week’s momentum, Continuing Jobless Claims rose this week. This week’s addition of 30k took our total to a 5 week high of 778k. It is likely that we will continue to see this number tick up as a consequence of the continued restrictions to fight the second wave of COVID.

Mortgage backed securities got a bit if a boost this morning after the PCE numbers came in showing a slow in inflation. The Headline number dropped from 1.4% to 1.2% last month. Mortgage backed securities are heading toward a ceiling that has been tested and held strong 3 or 4 times in November. We are holding a locking bias because breakouts are the exception and not the rule – bouncing off of this ceiling may push mortgage backed securities down.

Have a great Thanksgiving everyone!