A quick recap of the year so far...
We discussed that theme of "returning to neutrality" at the beginning of the day yesterday and the day before. After seeing yesterday's reaction to the economic data, the theme looks even more intact. Bonds barely budged, and flattened out right in line with the moving average that had previously hosted their sideways grind before the Ukraine curve-ball (middle blue line in the chart below).
So, if we're back to those "holding zone" technical levels, what are we waiting for? In terms of specific events, it's always worth considering that bond markets are focused on the next release of the Employment Situation data (Nonfarm Payrolls or "NFP"), and in that case, the wait will be over on Friday. The other possibility is that the waiting is more about needing to see data that can't be blamed on bad weather.
That need will likely continue to keep the range muted, UNLESS something crazy happens, like NFP coming in much stronger than expected, despite the weather caveats. Even then, such a report would be an outlier compared to the last two. It would have to be more than just moderately stronger, and carry some positive revisions to do serious damage. But such an event can't be ruled out until tomorrow.
If any of today's data is going to speak up and start pushing markets around, it would likely be early as Jobless Claims coincides with a Draghi Press Conference at 8:30am following the ECB's rate decision at 7:45am. There are several Fed speakers and Factory Orders reports at 10am. None of the above is a stand-out market mover, but if tradeflow considerations are pushing in the same direction (heavy corporate debt calendar this week), we could see some movement even before tomorrow's NFP.
Join Now or Login to Post Comments