LAST WEEK
Last week was another volatile week in the bond market. As you know generally good news is bad news for the bond market and that is how we began the week. Tuesday retail sales came is stronger than expected and on top of that many Fed Officials were speaking on Tuesday afternoon and they were speaking about the threat of inflation. Better than expected news on the economy and the Fed Members speaking about inflation the bond market ended the day lower than it began. The tables turned on Wednesday when the Consumer Price Index was reported below expectations showing inflation was not a problem. The CPI measures inflation at the consumer level of the economy. Thursday gave us two bond friendly pieces of data with a week job market report and the Philly Fed index showing weak manufacturing in the East. Bad news is good for the bond market and the market reacted favorably to the news. The tables turned again on Friday with the release of better than expected reports on the housing market. With all of the back and fourth action during the week the bond market was basically unchanged for the week.
THIS WEEK
This week we do not have many reports being released. On weeks were the news is limited the bond market gathers it direction from the movements in the stock market. if the stock market is doing well, money generally flows out of the bond market into the stock market and the bond market drops. We will get a read on inflation at the manufacturing level with the report being released on Tuesday Producer Price Index. Wednesday is the most important day with the release of the Federal Reserve Minutes from their last meeting. The markets will dissect the minutes looking for clues as to what the Fed's next move may be.
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