Good Thursday AM,
Unemployment claims out today were higher than markets expected for the first time in what feels like months.
Despite some positive news for bonds, we are caught in an exceptionally tight range. The ten-year is trading between 3.90% and 4.00%. Mortgage bonds in a similar range. I doubt this will change today, but I am confident it will change tomorrow when the Payroll numbers are released. If we get a strong payroll number, it will absolutely tank the markets. However, if we get a bad payroll number, we should see a break to the good side.
Do you feel lucky?
Do you think the number will be bond friendly? ANYTHING can happen and for that reason, I never recommend floating through the Payroll numbers. I also never suggest floating through CPI, 1st quarterly look at GDP, or the PCE numbers. The big 5 releases mentioned above can do crazy things to the market. Let’s see what tomorrow brings and let’s hope the payroll numbers are not TOO good.
After the Fed speaks (pretty much any Fed official but certainly, always Fed Chairman Powell) volumes of columns are written to recap what was said and what he meant. The person that does the best job of this is Nick Timiraos from the WSJ. He seems to have direct communication with the Fed and is regularly on point with his recaps.
Nick shared that: In his second day of congressional testimony, Fed Chair Jerome Powell made clear officials had not made up their minds about whether the central bank would raise rates by a quarter or a half point when it meets later this month. Mr. Powell’s comments Tuesday led investors to believe a half-point rise was likely. The Fed chief used Wednesday’s hearing to pour cold water on that impression. Friday’s employment report and next week’s inflation release will shape the Fed’s thinking about the pace of rate increases, Mr. Powell said.
Tomorrow is a big day in the markets. I do not recommend floating into it (although I do expect the jobs report to be tame).
Please remain safe and stay healthy, make today great!