A Portent of Storm

Stocks and Bonds are on the decline so far this morning as the markets sell off.  Gold and Oil are on the rise, making today’s plays seemingly based on fear–or hedging, whatever you want to to call it.  With no negative news out today, it would seem that traders are just bracing for the election, which is now just one week away.

In economic news, CoreLogic reports that home prices rose 1.1% last month to round out the year-over-year increase to 6.3%.  The ISM index shows that the manufacturing sector continues to grow.  Last month’s positive reading was 51.5; the market was expecting a 51.7, and we saw a 51.9.  The nice round number of 50.0 represents the baseline for growth for this survey.

The Fed meets today.  Nobody is expecting a rate hike announcement at the conclusion of the convocation tomorrow, but every word in the verbiage of the prepared statement will be dissected and debated.  The Fed Funds Futures is pricing in a 78% probability of a rate hike at the December meeting–December being the one year anniversary from the last hike, which was the first in nine ans a half years.

Looking at the technical picture for bonds, the 30 Year Fannie Mae coupon just broke to the underside of the 200 Day Moving Average for the first time in over a year.  Things aren’t looking promising for the continuation of the low rates we have been enjoying since the start of summer.  Anticipate higher interest rates ahead.