Oil prices are falling once again this morning, adding additional downward pressure to the US stock market. In spite of negative economic data released this morning, which included lower levels of inflation, bond prices are also losing ground. Although bonds are lower, they are still above the support line they were able to cross over late last week. Hopefully, bonds will be able to hold above this floor of support and travel sideways as they build steam to make another run higher. If they do break below support, all hope isn’t lost, as they will still be within their upward channel that has been in place since early December. The strength of this channel is strong and may provide bonds the muscle to continue to climb.
It’s Jobs Week, with ADP reporting job growth figures for the month of January on Wednesday, and the Bureau of Labor Statistics reporting their numbers on Friday. In both cases, the market is anticipating about 190,000 new jobs. However, we are anticipating a softer report this month. Since December’s strong report was 40% made up of 16-19 year olds entering the workforce, we anticipate that was heavily influenced by seasonal hires needed to support holiday shoppers. With demand for seasonal employees now falling, we anticipate the job’s data to reflect this lower demand. If the report is in fact below expectations, rates could improve even more.
With bond prices barely hanging onto support, there is risk in floating if you need to close in the near term. If you have time, and can stomach the risk and volatility, you can consider floating.