There’s been an awakening… Have you felt it?

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As I touched on earlier in the week, I have this sense the market is coming around to the fact that #lowerforlonger is not #deadandburied.  From a trading standpoint we rejected 2.17, but perhaps more importantly have held support at 2.24.  This would indicate to me that we are consolidating ahead of next Friday’s Q1 GDP read.  Look, it makes sense.  Not two months ago the suggestion was that 3% on 10s was a fait accompli.  A dash of geopolitical noise, some ISM misses, a stunning NFP, weak sales and a sense that the Trump tidal wave may be more of a ripple and now 2.62 seems like a distant memory.   More importantly, if you’ve been following my posts, I don’t see how any of this was a huge surprise.  It seems to have happened every year for at least the last decade.  It seems our economic reality wasn’t altered, it was just hibernating for the winer.  Well there’s been #anawakening and perhaps next Friday we will feel it.  

I found this article the other day on yahoo that suggests I may not be the only one who has: 

https://www.yahoo.com/news/first-time-since-trumps-win-economic-news-isnt-getting-better-142715566.html

I’ll go back to my 1/27 post calling for this move:

https://themancusowatch.com/2017/01/27/it-was-at-this-moment-that-the-fed-realized-they-screwed-up/

From my vantage point, if growth slowed to 1.6% in 2016 and we start 2017 with a clunker, how can the Fed continue to justify 3-4 hikes?  So how do we play it?  If you want to play the micro range it’s 2.17-2.24.  A wider range is 2-2.28.  I still think it would be tough to challenge 2 prior to next Friday, but we may seem some betting ahead of the number so I couldn’t rule it out.   Here’s a bonus chart of Fannie 3’s.

-Philip Mancuso

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2 thoughts on “There’s been an awakening… Have you felt it?

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