Very cautious float

Very cautious float

Stocks open lower this morning, but the losses are minimal for now. Mortgage Bonds are stabilizing at current levels and are pushing higher today, as Stock prices continue to sell-off.

Lower wholesale inflation from the Producer Price Index which came in at -0.4% vs 0-1% expected, and weaker than expected October Retail Sales of 0.1% vs 0.3% expected, are helping to support higher Bond prices.

November Consumer Sentiment 93.1 vs 92.0 expected, up from 90.0. Fed Vice Chairman Fischer said last night it “may be appropriate’ for the Fed to begin raising rates next month.

With stabilizing Mortgage Bond prices and slightly lower yields, I am recommending carefully floating. However, in this fast moving market, sentiment can quickly reverse.