The Veridian Blog

The bond market finally experienced some weakness before and after the New Year holiday last week as equities started the year on positive ground.  Treasuries fell despite the ISM manufacturing index falling to its lowest level since June 1980.  The ISM index suggested that manufacturing sentiment was much weaker than analysts had thought.  Although rates have taken a jump higher, we believe it is temporary.  Consumer confidence is at an all-time low, job losses continue to pile up and the housing sector has shown no significant signs of recovery.  The Fed will also begin to purchase up to $500 billion in mortgage-backed securities guaranteed by Fannie and Freddie in an effort to bolster the sagging housing market which translates into higher liquidity and hopefully, lower mortgage rates.   

This morning, the bond market is underperforming again stemming from whispers of the next stimulus package.  Stay tuned, however… the big number this week will be Friday’s unemployment report for December.