Largest One Day Move

We saw the largest one day move that the bond market has made in over a year yesterday. That resulted in a convincing break out of the range that mortgage rates had been in nearly all year as bonds fell hard and interest rates notched up over their 7-year highs. While it’s not unusual to see at least a bounce in the opposite direction on the following day, bonds are adding insult to injury as they look to close in the red yet again. This is likely the market positioning themselves for tomorrows always important Non-farm payroll jobs report. This is usually the single biggest market moving report of the month, and bonds look like a stumbling boxer with the bell ringing all too soon.

With all the recent Fed comments and their continual declining intervention, markets really have no choice but to look at the data for what it is. The ADP Employment report from Wednesday blew way past expectations, and that sets the stage that tomorrows jobs report likely doing the same. Given the overwhelming trend that interest rates are moving higher, we will maintain our locking bias.