After experiencing the best month in 30 years, US stocks are trending down in early morning trading. When you consider that stocks experienced such an epic month at a time when the US labor force lost more than 20 million jobs in a six week period, you begin to question the logic behind such a rally. It seems like the stock market has been driven by a false sense that everything will be ok. At some point, I believe that stock investors will realize that this is not a time to celebrate and we will see prices fall.
As states slowly roll out retail, hospitality and entertainment businesses, many business owners are running into resistance from employees who are hesitant to step back into the workforce. Reasons range from fear of contracting Covid-19 to some who currently find themselves making more money on unemployment than they were earning from their full-time jobs. Others are dealing with child care issues as they are forced to find an earlier than anticipated summer routine with school systems closed down early. Although I expect to see a jump in job gains, I don’t believe this will be as smooth as many are hoping for.
Mortgage bonds remain in a tight range. With tightening guidelines continually raising the price for a consumer to obtain a mortgage, we will maintain a locking bias.