Market Commentary: The global investment community is currently being buffeted by skepticism Washington will be able to produce a deal to avoid a budget crisis -- and worries the recent skirmishes between Israel and the Palestinians will erupt into all-out war in the region.
The so called “event risk” associated with each of these developing stories is fueling solid “flight-to-quality” buying of dollar denominated assets like Treasury debt obligations and agency-eligible mortgage-backed securities. As long as each headline generating threat persists – the support mechanism for steady to perhaps fractionally lower mortgage interest rates will remain firmly in place.
Thin market conditions due to the holiday related absence of an increasingly large number of traders will compound price volatility this week – especially on Friday.
Be patient. Be disciplined. And play it by the numbers.
