Choppy market conditions exist today following a weaker Retail Sales number (plus .3% versus expectations of plus .6%) and a strong showing on the New York Empire Manufacturing Index (up 3.5 points). Business Inventories also increased .8% to their highest reading since January 2009. Business Sales, a component of this index, was up 1.1%, the highest since September 2008. Adding to the roller coaster effect has been stocks which are off 50 points on the big board and 12 points on the Naz. Geo-political concerns (Egypt and beyond) coupled with lofty technical levels seem to be giving stocks a pinch. That trade has helped to support bond, note, and mortgage security prices. Currently, the 10 year note is up 2/32’s (yield 3.60%) while mortgage backs are plus 2/32’s. We had been off as much as 7/32’s on MBS earlier today. FYI, we took a mark at plus 2/32’s so we’re at fair value. Technically, we’re working on an “outside day up,” a bullish pattern per the text book yet the signal is not terrible strong. Another good sign is that we are 8/32’s above the 8 day moving average and if we continue to do so, it usually leads to the end of a bearish trend. Sell signals still exist on daily time frames so all told, trading is kinda like your mother in law going over the cliff in your new corvette (trader talk for neutral).
Scotty
Scott S. Eggen
Senior Vice President – Capital Markets
PrimeLending, A PlainsCapital Company
18111 Preston Road, Suite 900
Dallas, Texas 75252
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