Tuesday, May 12, 2020

Daily Market Report 5/12/20

http://MikesDailyMarketReport.com: The NFIB Small Business Index dropped from 96.4 in March to 90.9, which many thought it would dive down into the 80s.  This report represents the confidence in Small Businesses.  The Consumer Price Index dropped 0.8% in April and it's YoY dropped from 1.5% to 0.3%; and when you exclude food and energy from the equation, which are uncontrollable variables, then we have the Core CPI.  The Core CPI dropped 0.4% in April and it's YoY dropped from 2.1% to 1.4%.  You can see the difference, especially for April, the impact that food and energy can have, as Oil dropped to negative in April for the first time.  The CPI is one of two inflationary data that we review on the basis for Consumers.  The other, is the PCE, which is the Fed's favorite gauge for inflation.  Stocks are trading in Mixed Territory again today, as Investors received a report that there were 6 new cases of coronavirus in Wuhan; and Dr Fauci is providing his testimony before the Senate with warnings of re-opening the economy too soon.  The Fed will be purchasing Corporate Bonds today in order to assist with Businesses surviving this current period.  Corporations generally prefer to issue bonds in lieu of bank loans.  MBS is currently Down 2bps, so Mortgage Rates remain Unchanged.  Yesterday's Bond Rollover pushed us further down the graph and closer to the 50 DMA, which acts as our floor of support.  The question will be if it holds as a floor and gives us a bounce higher, or do we break below it.  Yields remain steady and currently sit around 0.69%

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