The stock market is climbing higher again this morning, as it appears to be making another run at setting new all-time high levels. Given the current political, economic and international turmoil, it’s surprising to see stocks remain as strong as they have. Since the Trump election, stocks have risen more than 20. With very little pull-back during this time, the move has been a relatively stable climb higher overall. Without a reasonable pullback in stocks, it will be difficult for mortgage bonds to gain the steam needed to make a decisive break above the cluster of moving averages that surround current bond levels.
It’s Jobs Week, with ADP scheduled to release their estimate of new hires for the month of July on Wednesday and the Bureau of Labor Statistics (BLS) releasing theirs on Friday. Once again, the market is anticipating between 175,000 – 180,000 job creations in each report. As always, the markets will be intently waiting for the reports to see if the job market continues to show signs of slowing. A slower rate of new job creations will certainly be of concern to the Fed, which has stated that future interest rate hikes will be “data dependent.” Meaning that a slowing economy will make it more difficult to raise interest rates, which a strong job market will set the stage for continued increases.
Given the volatility associated with this week’s Job reports, we will maintain our locking bias.