25 Sep Very Cautious Floating
Investors received mixed data this morning, with New Home Sales for August beating expectations (topping July by 8%). However, Durable Goods Orders rose by only 0.1% versus a 0.5% estimate, and the previous month’s miss was revised even lower. The housing market remains hot, but the rest of the economy has yet to show consistency. Here comes the debt ceiling debacle, with both sides pointing the finger at each other. Politics will likely start to gyrate the markets on a day to day basis as the mid October deadline approaches. Stocks are flat for now, and mortgage bonds are moderately improved. Bonds have had a strong 280 basis point run up since early in the month, albeit most of it due to the Fed announcement. But even though prices are above the 100 DMA for now, a pullback for profit taking would not be out of the question. We can float very cautiously, but be prepared to lock in these gains.