Markets are flattish this morning on no real news. Bonds and MBS are flat as well
Not a lot of data this week – the biggest number will be the second revision to first quarter GDP later this week. The Street is forecasting GDP rose 0.9%. We will also get pending home sales and new home sales.
Pain in the junk bond market is spreading to the non-commodity space as retailers are beginning to take it on the chin. This is one issue that could certainly cause the Fed to maintain low interest rates. Pain here is generally considered bond bullish as well, which means it is a catalyst for lower mortgage rates.
Mohammed El–Erian says that the markets are still not fully pricing in two more hikes this year. He believes the Fed has a small window in which to pursue normalization and they intend to take advantage of it.
Lending Club’s woes are putting a wet blanket on the rest of the fintech industry. The industry is going from playing offense in Washington to playing defense. The regulators are hungry to bring this industry to heel.