Notes and Bonds Hanging in There

February 6, 2017 10:28AM CST

Friday’s payroll number action had a whipsaw spin to it, and the market’s focus seems to have moved on to start the week. Barron’s headline talked about how anyone looking for any clarity on stimulus plans have had to wait, as immigration issues and healthcare uncertainties have priority.  This may change some perceptions on how fast interest rates can rise, especially since there is no wage acceleration as measured in last Friday’s report.

Bonds have already rallied through last Friday’s highs awaiting stocks opening. We are in an environment where it’s very dangerous to chase any rally or break, as trading range rules remain in the operating backdrop. News releases this week are light with Friday morning's consumer sentiment being the most important. As with any market caught in a range, there are a myriad of reasons keeping price action in check. The end of QE and eventual tax cuts in the U.S. are not a recipe for a bull market . The rapid rise in rates in the 4th quarter of 2016 have attracted some re-balancing demand for coupons, and inflow into bond funds is at a 2-year high according to Barron's magazine. Look for the standoff to continue. 

 

30yr Treasury Daily Chart

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