December Treasury Bonds Reach Critical Retracement Level
Jobs Data Friendly to Treasury Bonds, Bearish for Dollar
Non-Farm Payrolls were down 95,000. The jobless rate was unchanged at 9.6%. The government lost 159,000 jobs. This number was split between Fed census workers and state workers. The private sector gained 64,000 jobs which was right in line with expectations. The bottom line is the jobs market is not keeping pace with growth in the economy.
Is there a bond bubble today? Many well known investors and portfolio managers certainly seem to think so. In fact about a month ago Jeremy Siegel came out with an article in the Wall Street Journal proclaiming a huge bond bubble was about to burst, even comparing this to the technology equity bubble of the early 2000s.
The pessimists have moved out of stocks and into safer havens. Yet, fundamentally, cash flow and dividends show stock values are attractive. The big opportunity could lie in the simple fact, fundamentals in areas such as profitability versus valuations show a disconnect in terms of perception versus reality.
New week, new month and new quarter. Will it bring new money into the equity markets? That question will be answered soon enough as the new quarter begins. There will be plenty of economic data to mull over this week and next. Earnings start next week, and the fourth quarter could be make it or break it time for the markets.
December Treasury Bonds closed higher on Friday after an early morning setback. Greater demand for risky assets helped push yields higher overnight, driving down the T-Bonds.
Treasury Bonds bottomed after a surprise decline in the Michigan Consumer Sentiment Index. This was another sign of a weakening economy. Stocks fell on the news and debt instruments rallied.
Bonds Rally Despite Friendly U.S. Economic Reports
December Treasury Bonds broke on Friday as investors shed safer assets in favor of higher-yielding risky assets. The main trend remained up on the daily chart while the market completed a 50% retracement of the 124’22 to 135’19 range. The first target was 130’17. The market tested 130’12.