Yesterday's Fed Minutes are making my last post look pretty good about staying patient and waiting for the right opportunity. It just goes to show you how we can go from having a bad morning to a fantastic afternoon. The market really was surprised about how much the strength of the dollar was discussed between all the Fed Presidents. Plain and simple, the market received confirmation on the perception this Fed remains willing and able to step up to the plate when needed. This morning the 10-Year Yield is hitting lows not seen since the summer of 2013 under 2.3%. What does this tell us? Well, so far the bond market has been moving higher on the confirmation that the announced bond buying will stop. This is interesting if you stop and think about it as it really comes down to simple supply and demand. Interestingly enough, all those purchases over the past several years have cut the supply sharply. Now, you still have demand, but ironically enough a smaller supply. I did pass Econ 101 and I know that when demand outstrips supply prices increase.
Keep an eye on the 10-Year as the bond market usually signals a potential market move before the stock market. There were not too many people that thought this is where we would be with yields right now, but that is generally why you don't follow the crowd.
Do your own homework and understand your asset allocation.
If you would like help discussing your portfolio please give me a call at 239-288-6542.
Best,
Eric Marvin
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