07 Apr Currently a locking bias
When a disappointing Bureau of Labor Statistics’ (BLS) Jobs report combined with the United States of America dropping bombs on a Russian ally isn’t enough to push bonds above a ceiling of resistance, you know you’re up against a seemingly impenetrable ceiling. Although bonds briefly broke above in early morning trading, they were quickly pushed back below. Even more interesting is the reaction from the stock market, which is trading higher at the moment. This backwards logic is baffling when you consider the magnitude of what happened in Syria last night and the potential impact that can have on US relations with Russia and other countries that support Syrian President Bashar al-Assad.
Although seemingly less important than what is happening in Syria, the BLS reported that the US only added 98,000 new jobs in the month of March. This was far below the 180,000 new jobs anticipated by the markets. However, the Household Survey showed a completely different picture. The Household report is derived from phone polling about 60,000 households, the results of which supported an astonishing 472,000 new jobs created in the month of March. As a result, the Unemployment Rate, which is derived from the Household survey, fell from 4.7% down to 4.5%. This matched the lowest levels seen in almost 10 years! As a result, markets aren’t overly excited about the lower BLS report.
Unless bonds can break above the afore mentioned support level, we will maintain our locking bias.