29 Jun Waiting on Job Data
Today is a quiet day for scheduled economic reports. However, with important job reports scheduled for later this week, we could have some market moving news. Current estimates call for 3,000,000 new jobs creates in the month of June, which is estimated to drop the unemployment rate from 13.3% to 12.3%. With more businesses re-opening following Covid-19 shutdowns, we can expect the employment numbers to improve in the months to come. The concern will be at what point we see the numbers stabilize. We do not expect to see numbers get back to where they were in February, before most of the shut downs occurred.
After once again hitting the floor of support provided by the 200 day moving average, stocks bounced higher this morning. This is again a technical move and one that I expect will be short lived. As long as stocks stay within the current downward trading channel, stocks will likely continue bouncing from the top to the bottom of the channel. Keep in mind that each time stocks test their floor of support, the floor weakens. Eventually, stocks could break down in the near term and fall beneath this critical level.
Mortgage bonds remain near the top of the trading channel. The risk of rates pulling back in the near term is high. We suggest a locking bias.