GDP report came out showing a -6.1% CONTRACTION...so we are producing 6.1% LESS goods and services according to the number on the surface. The most interesting thing happened though. Investors ACTUALLY pulled the POSITIVE from this. Looking closer: they noticed that we are sitting on $108 BILLION less in "unsold" goods and services inventory AND spending is UP 2.2%. This was good for stocks and bad for bonds.
After trading in a 78 basis point range (HUGE volatility) the FNMA 4% was down just 22bps. Rates will rise again slightly tomorrow...but are trading under 5% (range) still on the 30 year fixed.
Two things weighing heavy: MORE record bond auctions coming and the feds released notes today indicating that they see a turn-around starting in the economy.
FIRST U.S. death from swine flu: was a Mexican Baby who came across the border for treatment with parents. YIKES. I will leave this one alone... It will be interesting to see the cycle of this sickness as it runs its course. For now: the markets have calloused to the threat of it and we are getting mixed reports on the science such as who is most susceptible etc. The world health organization is supposedly preparing to raise the "threat level" on the outbreak to a "5" out of 6... Again: investors don't seem to be worried that it will affect markets even though "pharmaceuticals" stocks are UP for now.
Dow was UP 168 points.
Have a great day,
