Bonds React to Strong Employment Numbers
Today’s Spotlight Market
Friday?s unemployment report showed a gain of 215,000 jobs for March. The unemployment rate inched up by 0.1% to 5.0%. The labor force participation rate also increased to 63.0%, however wage growth was disappointing, as wages grew only by 2.3% compared to the previous year. 5% is considered by many economists to be the natural rate of unemployment, so traders and Fed observers will be watching to see if there is any wage push inflation on the horizon.
Fundamentals
After a volatile start to the year, most of the US equity and world commodity markets recovered in March. The next Federal Open Market Committee meeting is April 26-27. Most Fed observers are not expecting a rate hike at that meeting, however the improved employment numbers may point to a potential rate hike in the June 14-15 meeting. The Fed will continue to monitor other economic indicators, such as the personal consumption expenditures price index (the Fed?s preferred measure of inflation), as well as the GDP data for the first quarter of 2016 which ended last week..
Technical Notes? -? View Today’s Chart
Turning to the six-month continuation chart, we see that US 30-Year Bond prices have been trading in a narrow channel over the past month. This channel occurred after a substantial bull run since the first of the year. In March, the 20-day Simple Moving Average (?SMA?) crossed below the 50-day SMA, a bearish sign. The 50- day SMA has been providing support, but this support has been tested several times recently, but still has held relatively as a support level. 14-day RSI is showing as a bullish 67.60.
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