Credit markets are quiet this morning with a holiday in Europe and important economic news coming later in the week. The readings lately have been generally weak, but sentiment numbers have remained very strong concerning confidence in the economy going forward. Therefore, a bit of a stalemate has ensued and price action has been dampened. Bulls can say bonds are holding well in the face of a soaring Nasdaq, which is making new highs again this morning. Bears can point to pressure due to huge gaps in the governments coffers if big tax cuts get through Congress. This will greatly increase supply of notes and bonds down the road to cover the gaps in spending vs tax receipts. The Fed weighs in on Wednesday as the May two day meeting begins, and on Friday morning the jobs number release hits the tape with expectations for an 185,00 increase. There will also be plenty of fed governor’s speeches later the week, but all this is likely to be overwhelmed by the stock market if it keeps chugging along, unless the tone of those speeches becomes extraordinarily tough. Unlikely.
Jun ’17 30yr Treasury Daily Chart