Lackluster trading is in vogue with both bonds and stocks. Stocks, depending on the day, are up 100 or down 100. Today is an up day with the big board trading at 10,129, up 106 points. On the chart, S & P futures have good support at 1050 and solid resistance at 1104. They are coiling for a breakout with the $10,000.00 question being which way? Bonds, notes, and mortgage backs seem to waffle around in a range of plus 2/32’s to down 2/32’s. Currently, the 10 year note is off 4/32’s to yield 3.31%. Mortgage backs are off just a 32nd.
Earlier today, Pending Home Sales hit a 6 month high, up 6.0%. Funny what 8K can do to a person. Every region of the country except the South had nice gains. The Northeast led the way at plus 29.5%. For the most part, we continue this risk aversion trade, continuing to struggle with European debt issues and softening growth in China. On the debt front, those sick and hurt countries need to roll over 30 billion Euro in debt this month and 500 billion in July. I wonder who will show up to buy the paper.
At home, the economic data continues to show stability and slight growth as the days and weeks pass. Friday’s Employment data will be huge. Some are calling for as much as 600K new jobs created. Keep this in mind today and tomorrow as a print of that magnitude will raise holy H E double hockey sticks with Austin mortgage pricing. Be square or beware. We’ll handicap the report tomorrow.
Technically, the chart is telling us to be cautious. Sellers have been dominate the past two days, pushing sell signals into play on the daily 10 year note chart. Oscillators have rolled over to the bearish camp as well, stalling from midrange levels. Nothing huge here but a bearish feel is setting up and into payrolls, we could see traders square up, pushing yields a touch higher. With the run we’ve had, best bet is not to throw caution to the wind come Friday morning’s data.