There seems to be little news that will move the market greatly today. So expect a sidewards trend. The news on Goldman Sachs seems to be predominating, along with economic good news (good growth and low inflation numbers). Greece, thankfully, isn’t in the headlines today. Late yesterday, the bump you saw was due to money flowing out of bonds, into stocks. You notice that both had sharp increases (rates, not bond prices) and Dow Jones, at around 2:00 pm.
On Friday, the significant rate decrease was due to the announcement that the SEC was suing Goldman Sachs, driving “flight to bonds.” Yesterday’s late bump came from the announcement that the SEC vote to make the suit was divided and close (3-2), thus giving Wall Street confidence in the outcome. Moreover (for whatever it’s worth), the vote was propagated along political party lines: Obama-chosen SEC head, and two Commission Democrats voted to make the suit, and two Republican members voted no. So, this likely emboldened the financial community’s confidence that a successful suit might not prevail. So money retraced a bit from bonds back into stocks, raising the rates a tick (still lower than Friday, though.)
Goldman is by no means out of the woods though, as the European community has concerns and suits of their own. There is some talk that Goldman activities were forefront in masking the Greece financial weaknesses, thereby enabling it to continue further to crisis state.
Domestically, economic signs point to a strengthening economy. (Though, I personally don’t like the long-term prognosis.) And inflation — which is a major bond mover — is low. Last month, CPI (consumer prices) rose by 0.1% (or 1.2% annually.) Fed target is historically around 2% where they begin to act. So, if you hear CPI monthly going to 0.2%, begin to look for a raise in rates, as this one little tick translates to surpassing their threshold, with an annualized 2.4% inflation rate. Currently however, the futures trading on the prospect that the Fed will raise rates in November, is down — an expected 46% chance that they’ll raise a quarter point, down from a 62% expectation, a month ago.
No major market-moving news seems to be on the horizon that would require a lock in rates. Again, if you’re at all interested in a SMS text message on alerts to lock or float, click on the SMS Alerts at the top of the page, and register your address.
