Political News Dominates Headlines

There has been a lot of potential market moving news in the past 24 hours, primarily political news that could impact President Trump. The interesting point to note is that stock investors don’t seem overly concerned at the moment, as the S&P 500 is currently up 2.25 points. Further, yesterday stocks hit new intra-day all-time high levels. The bond market is generally considered to be a bit more realistic than the stock market, so bond prices are moving higher for the day.  However, they have not been able to break above the important Fibonacci level that is holding back further improvements in interest rates.  As the legal battles heat up surrounding President Trump, we could see rates improve.

Facebook recently announced that there appears to be an “increased level” of activity out of Russia aimed at impacting the direction of November’s mid-term elections.  Based on the activity, it seems they are trying to sway voters towards the Democratic side, which would then help block the political agenda of President Trump. Further, in light of yesterday’s guilty announcements from two of President Trump’s key advisors, a Democratic Congress and Senate could result in talks of impeachment. That would cause a massive political distraction that could benefit the Russians.

Rates are at great levels, considering the overall technical picture. If bond prices can break above the Fibonacci level, we could see rates improve. However, unless that happens, a locking bias remains prudent.