09 Jan Locking Bias
Jobless claims were better than expected this morning, coming in at 330,000 vs. the anticipated 338,000. There was little reaction in the bond market, and stocks are a bit lower after the news. Planned layoffs were reported today at the lowest levels in 14 years. It seems that all economic reports are coming in stronger than anticipated, which increases the likelihood of a stronger GDP. All of this is bad for the bond market, and has pressured interest rates higher the past couple months.
Today we will have a 30 year bond auction. With this coming one day ahead of a BLS Jobs Report, there may be a weak demand for investors to take the risk of buying today. We anticipate the jobs report to show a decent level of jobs created, which could push bonds down to the bottom of the current channel. Given the risk vs. reward opportunity, we are going to suggest locking in today. Of course there is a chance the jobs report will be below expectations. However, with the number of recent reports all showing strengthening in the economy, we expect this to be reflected in a higher level of jobs created.