Last week had economic reports that were bond friendly, but bonds didn’t respond by moving up to push rates down. This week, the ISM N-MFG PMI (Institute for Supply Management non-manufacturing report on Business) came in higher than expectations at 59.7 versus estimates of 57.3. This would normally push bonds lower resulting in higher rates, but they aren’t selling off. This ISM N-MFG is widely considered the 2nd most important report behind this Friday’s jobs report.
Stocks are slightly positive and have remained within a tight range for the last 10 trading sessions. Specifically, the S&P 500 is hitting a ceiling at the 2820 range, which happens to be the same area last seen in October, November and December before the big sell off in December. It is likely that markets will hover in their respective ranges until investors receive a strong enough reason to break out, whether it be up or down. It could certainly be this Friday’s jobs report, or surprising political news. We will maintain our locking bias position.