Today
nothing matters, the bond market should be relatively unchanged by the end of
the session; if we are wrong and the bond market experiences any significant
movement it is likely to be a decline in prices and increase in rates; hard to square that a rally of consequence will occur. It is all about
tomorrow’s January employment report. Investors, funds and traders should by
now have their positions worked out ahead of what will be the usual monthly
surprise. It is a rarity that employment data doesn’t shake things up;
depending what the report reveals we can expect a rally or selling pressure but
not a yawn from markets, stocks or bonds and mortgages. The “consensus”
estimate for non-farm job growth was notched up a little after ADP reported
Wednesday private jobs increased 175K, the consensus now is 185K increase in
non-farm jobs with the unemployment rate unchanged at 6.7%.
Interest rates moving a little higher ahead of tomorrow’s
employment report and the better open in the US stock market. As we noted yesterday
we recommended locking yesterday, we never take a position into the employment
report, it is way too uncertain and usually deviates from forecasts. Tossing a
coin is not the prudent way to make decisions based on employment data. The
longer technical pictures remains bullish but a stronger than expected
employment report tomorrow will take a heavy toll on prices of treasuries and
mortgage markets. Best to stand aside today and keep locked through the day.
In
Europe this morning the ECB and the Bank of England both left interest rates
unchanged; it was widely anticipated in global markets. The ECB walks in
the footsteps of the Fed; the central bank last month strengthened its forward
guidance when Draghi reiterated that he would keep interest rates at current
levels or lower for an extended period.
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