Economic Optimism Causes Headwinds For Bonds
Today’s Spotlight Market
Bond futures were slightly higher this morning, after suffering three consecutive days of setbacks.? Consumer optimism and strength in equity prices has weighed on the defensive appeal of the treasury market.? The stagnation in the US Dollar has also not helped Bond prices, as it could stop attracting foreign investment.? However, the Greek situation could pressure German Bonds and possibly add a downside buffer to US treasuries.
Fundamentals
The Michigan Consumer Sentiment Index, along with several other sentiment indicators, have posted their highest readings in multiple years.? Existing home sales have also posted their best reading in a year and a half.? These positive economic indicators have raised the risk of the Federal Reserve raising interest rates.? This earnings seasons has a trend of better than expected earnings, but revenues have been disappointing.? Earlier in the cycle, it seemed that traders were focused on the negative of revenues missing targets, but the focus seems to have shifted toward the positive of earnings coming in better than expected.?? Not all is rosy for the US economy.? The US economy added only 126,000 jobs in March after adding more than 200,000 jobs in January and February.? GDP growth and retail sales have also been lackluster at best, which could delay a possible rate hike.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the June Bond trading in a tight range near the 165-00 level. Yesterday?s down day resulted in prices slipping out of this range and trading below the 50-day moving average, which can be seen as negative in the near-term.? Prices may test the 159-00 level on the downside.? If prices are not able to hold 159, the June Bond contract could test the 155-00 level.
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