It's Hump day and a week after jobs week, traders have been tentative to make any big moves. You may recall (if you read my blog post on Friday) that the Non-farm Payroll numbers were abysmal. This served to push bond prices higher by 43 basis points. I said that you may want to float to see if we can get some follow through this week but I also cautioned against greed. There was a bit of profit taking on Monday with the FNMA benchmark bond finishing down 14 basis points. Yesterday, it closed up 6 basis points and so far today it is up 14 basis points with a current price of 102.97. This is testing the highs of the last few months.
The RSI is overbought by quite a bit which means that aside from any big weak economic news or a geopolitical catastrophe, traders may take some profits off the table with no real impetus to push prices higher. The JOLTS report came out today and was quite strong. All of the recent jobs reports other than the NFP have been respectable to good. It's my thought that traders aren't really sure about the job market or the economy right now. It is quite nebulous and trying to guess what the Fed is going to do next week at the FOMC meeting with regard to the Fed Funds rate is next to impossible. Tomorrow we have Jobless Claims and Wholesale Inventories and Friday we get the Michigan Consumer Sentiment Index. I don't anticipate any significant moves in either direction so if there isn't much chance for a big reward if you float AND considering the fact that rates are fantastic right now, I would recommend locking. Next Wednesday is Fed decision day. If they decide not to raise interest rates then, the chances increase for a rate hike at the next meeting. For now, it's a guessing game that I wouldn't want to play with my money.
Make it a great day and contact me if I can help in any way.