All day long, I get asked what pattern I am seeing with interest rates and what is coming next. When Bonds fall beneath long-term solid support as they have during the month of May, the trading activity typically becomes volatile due to everyone’s uncertainty of the next directional price move–which is typically swift. The Bears, who just pushed prices below resistance, keep selling in an attempt to capitalize further, AKA “shorting” the market. Conversely, the Bulls are trying to pull Bonds back higher to increase their gains–or regain their losses. The Bears currently have the upper hand as the 200-day Moving Average now acts as a strong ceiling of resistance. Clients should understand that rates will not improve unless the Bond can bust back above what is presently a strong resistance layer–the last penetration of the 200-day MA was in March 2014. But rather than bore you with another chart showing all of that, I thought that it might be refreshing to insert yourself into this peaceful scene for a moment.
Good news=higher interest rates. Bad news=higher interest rates. Irrespective of the data this week, the bond bears are ruling the trading floors, sending conventional mortgage rates up 0.25% over the last 10 days.
This Friday’s Jobs Report is expected to reveal that 218,000 new employment opportunities were created last month, reducing the Unemployment Rate to 5.4%. Ahead of the official release, ADP Private Payrolls showed a figure of only 169,000 new jobs, and the fifth straight month of a constricting labor market.