10-year has been stuck at 5.18% pretty much since the ISM number at 10AM. Given the rally today, the tone is muddled, so I’m less bullish going into tomorrow. BOLD PREDICTION TIME!
Bullish: Number comes in under 150,000, hourly earnings in line or lower (0.3% MoM). Bonds rally 3/8 to 1/2, curve flattens 2-3bp. Swap spreads tighten, MBS widen on volatility concern.
Neutral: 150,000-240,000. Might be a slight relief rally, particularly if hourly earnings are tame and/or the number is more toward the bottom of that range. Curve might steepen at the higher end of that range. Swap spreads tighten, MBS perform well.
Bearish: 240,000+ and/or 200,000+ with hourly earnings high. Bonds sell off mildly, 1/8 to ¼. Curve steepens 1-2bp. Spreads widen, MBS underperform Treasuries.
If it turns out ADP was right as we really get 360,000 jobs added, all bets are off.
Thursday, July 06, 2006
Thursday Close -- BOLD PREDICTION
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You win! And the prize is... you get to be very proud of yourself! In addition, you win the respect of both people who read this blog!
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