Fears of inflation seem to have sent Mortgage Bonds lower this morning and beneath layers of support at the 25, 50 and 100 day moving averages. Oil, once again, hit another high of 135.09 per barrel. As I mentioned yesterday, there is / was a growing concern and today the Bond market is reacting and disliking oil prices at this number. The Fed Minute meeting yesterday also contained concerns about inflation and resulted in added pressure to Stocks as well as Bonds.
If history actually repeats itself, Bonds falling below the support may mean that they may continue to drop until they hit the next level, which in this case is the 200 day moving average; about 70 bp below current level.
And lastly, jobless claims were reported at 365,000, aprroximately 7,000 below the expectations of 372,000; the lowest reading since April 5. While signs of struggle still exist, this report is definetly positive.
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