Immediate danger has passed
The markets look set to open quietly today. Dow futures are up 55 points and bond prices are close to unchanged.
There were no major developments over the weekend. The business journals were filled with lead stories on the stunning jobs report and the twists and turns of the tariff tale. Most experts do not believe we have heard the end of trade war worries, but the immediate danger has passed. As long as Peter Navarro remains the voice that Trump is listening to, the risk is that more actions will be taken down the road.
Economic report releases
Perhaps this week the markets will focus on economic news. The key number for the bond market will be tomorrow’s CPI report. Economists are looking for a .2% gain on the core rate, and the year-over-year rate to move to 1.9% from 1.8%. The bond market will be highly sensitive to anything .1% above or below expectations.
If CPI is .1% higher than expected and Retail Sales on Wednesday is higher that expected, we should see the 10-year make another run at 3%. If the numbers are benign, the 10-year will likely remain stuck in the 2.80ish% range. While the 10-year has traded as high as 2.95% over the past few weeks, the weekly closing yield on the 10-year note has been in a range of 2.83-2.89% range for seven consecutive weeks. There is no law the yield most break higher or lower soon, but the odds are building that it will.
March certainly came in like a lion. Today might be our first indication that it will go out like a lamb.
Opening market reads
- The 2-year is 2.27%
- The 5-year is 2.66%
- The 10-year is down 1/32 to yield 2.90%
- The 30-year bond is unchanged at 3.15%