Wild week recap and what's on tap next week

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Published Date 3/23/2018

Stocks choppy today, not much new about that. President Trump signed Congress' newly passed $1.3 trillion spending bill, ending suspense over a threat to veto the budget and shut down the federal government. However, Trump said he is 'unhappy' about the measure. These days global equity markets so confused and uncertain the reactions are growing more nervous, reacting on about anything in wild movements. The stock indexes were better this morning, but when President Trump signed the bill, stock indexes improved from lower reads to increase the DJIA 129 points from down 90. That lasted all of 30 minutes before selling resumed.

This week loaded with information from Trump to the FOMC and the Fed’s 2 yr outlooks for the economy and inflation. Two housing reports, existing and new home sales still holding well under the circumstances of increasing prices and lack of inventory particularly affordable housing. The Fed confirmed three rate increases this year, will it happen? Depends on equity markets and any increase in inflation outlooks; both stabs in the dark regardless of what you hear. The stock indexes at very critical technical levels now; after the fall talk is increasing from investors being interviewed by the media that this is a buying opportunity. If it is, it isn’t likely to be much of a rebound. The trade concerns won’t be swept under the rug anytime soon and likely will become more serious before governments get down to business and sit at the table to re-do the trade agreements that currently exist. It won’t be quick or without more turmoil.

Interest rates this week, like previous weeks, about unchanged from last Friday; 10 yr down 4 bps but still holding its narrow range, MBS prices for 30 yr conventional mortgages not moving much.

Next Week: Monday, 2 yr note auction. Tuesday, 5 yr note auction, March consumer confidence index. Wednesday, 7 yr note auction, the final Q4 GDP, Feb trade deficit, retail and wholesale inventories, Feb pending home sales from NAR. Thursday, Feb personal income and spending and the PCE inflation data March Chicago purchasing mgrs. index, final March U. of Michigan consumer sentiment index. Friday nothing on the schedule.

This Week: 10 yr note -4 bps to 2.81%; Fannie 4.0 30 yr coupon +2 bps. The DJIA this week -1414, NASDAQ -489, S&P -164. Dollar weakness drove crude and gold higher; gold this week +$41.00, crude oil+$3.60. Dollar/yen -1.38 yen, dollar/euro +$0.0078, dollar index -0.78.

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