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Why are stocks in rally mode? In less than a week, 10-year bond yields have fallen by .4 percentage points, the dollar has decreased by 5 percent, and 30-year fixed mortgages have dropped by .5 percent sending home prices down .3%, according to CoreLogic. Oh, and this week we learned that in August job openings fell by over 1 million!
Stocks are on fire because bad news lowers rates, which lifts asset values. If the economy continues its sputter, the Federal Reserve may ease its tight monetary grip.
Financial markets are forward-looking; they anticipate what’s around the bend. Presently, it appears Mr. Market likes what he’s seeing in the offing.
Correct, bad news has morphed into good news, a sign of what’s to come.
Sources: BLS, Yahoo Finance, Fannie Mae
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