Steel Industry FTW!

As anticipated, mortgage bonds fell to the bottom of the trading channel today after failing to break above the ceiling yesterday. The news will say it was due to the steel and aluminum tariffs announced yesterday by President Trump. However, it was bound to happen regardless. This was just a stated justification for what was already meant to be.

The market fears that the tariffs will add upward pressure to the steel and aluminum industries, which could be passed on down to the consumer level.  In the world of politics, there are often winners and losers. It seems the U.S. steel industry had a significant win with this one.

Stocks have been all accords the board today. However, they remain in a clearly defined downward trading channel. If this channel continues and brings prices down to levels lower than they were at the bottom of February’s market correction, it could signal a longer term problem for the stock market. We will have to wait and see how this plays out.

We will maintain our locking bias.