Good Thursday AM,
Bonds are pulling back as we anticipated. Why did we anticipate this? It was easy. The price moved up into the upper reversion zone and price can never hold up there for long until it moves back toward the mean. I believe we remain in the upward trend today. We previously hit a bottom of 1.13% on the 10-yr, twice. A double bottom tells us that is a strong line of resistance. We need to break through it if we get back there (which I think we will) although in the other direction, if the 10-yr breaks above 1.30% (currently at 1.22%), we will sprint up another .125% in rate Usain Bolt quickly. Tomorrow is the BLS jobs report, the biggest report of the month. The “experts” are calling for 900k new jobs created. That seems like a big number but not unattainable. The ADP report yesterday was a dog. The unemployment report today was In line with estimates. I am not a fan of relying on ADP for direction but 900k new jobs when stimulus is still ongoing seems like a tall order. That all said, I would never recommend floating into a jobs report. It comes out too early (before rates are available) and markets are often very volatile from it.
That’s what I’ve got today.
Please remain safe and healthy, make today great!