Last week was again full of its ups and downs, but as I said before, the current trading pattern would be hard to break. As far as volatility goes, last week was mild, even with the movements either direction. In fact, if you look at the charts, bonds basically “flat-lined”, moving either side of neutral all week, ending down slightly in pricing, but rates remained basically the same.
The week was the beginning of earnings season and most earnings are disappointing. Fears for the week were relatively balanced on news, giving neither recession nor inflation an edge. The big news, as expected was the FOMC Minutes last Tuesday which gave insight into the decisions by Fed Presidents Fisher and Plosser to go against the flow. Their comments raised concerns about inflation which kept the “fear factor” balanced.
This week will likely be different as there is some market moving data scheduled to be released, Retail Sales being one of them and is already moving the markets. With inflationary fears still entrenched in the minds of investors, the CPI release will likely be the big event of the week.
Bonds are still trading in their sideways pattern, stochastics are improving slightly, but technicals cannot hold back investor fury if the data shakes the markets. Here is this week’s rundown:
- Monday: Retail Sales (8:30)
- Tuesday: Producer Price Index (PPI) (8:30), Empire Manufacturing Survey (8:30)
- Wednesday: Consumer Price Index (CPI) (8:30), Building Permits (8:30), Housing Starts (8:30), Industrial Production (9:15), Capacity Utilization (9:15), Crude Inventories (10:00), Beige Book (2:00)
- Thursday: Initial Jobless Claims (8:30), Philadelphia Fed Index (10:00), Index of Leading Economic Indicators (LEI) (10:00)
As you can see, bonds are likely going to have a rough week, certainly if data is unfavorable. Inflation related data will need to be favorable if bonds are going to see any real strength this week, so locking is likely the best course, at least out of the starting gate.
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1 response so far ↓
1 Ling // Apr 15, 2008 at 6:23 pm
I’ve been waiting for some sign of movement in municipal bonds. Seems like they’re grossly undervalued, given the strong basics and the fact that they just got caught in some subprime cross-fire. Any thoughts on how munis are going to react going forward?
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