Treasuries rallied a second day as it appears the global bond rout is easing. The dollar extended a fifth weekly slide and oil was up for the ninth consecutive week, the longest weekly advance since 1983. Gold rose Friday, rising to a 12 week high and capping the biggest weekly gain since January. Equities were quiet.
Regarding the data, manufacturing data in April disappointed and consumer confidence unexpectedly fell, falling by the most in two years on economic pessimism.
What will occur this week? An emerging trend is the unexpected occurring. There is a ton of housing statistics released. Will the OER component of the inflation indices begin to rebound, a rebound predicated by strength in the housing sector?
Most measure their wealth by the value of their homes, a key input to Owners’ Equivalent Rent (OER). If the housing data is stronger than expected, I can argue Treasuries could resume their selloff. Last week Treasuries touched year to date highs.
Speaking of inflation, the CPI is also released as are the Minutes from April’s FOMC meeting.
Markets are fascinating as they represent every variable of life. The issue at hand is the weighting of these variables, a weighting that can instantly change.
Last night the foreign markets were down. London was down 0.07%, Paris down 0.76% and Frankfurt down 0.15%. Japan was up 0.80% and Hang Sang down 0.83%.
The Dow should open quietly lower. There was little reaction to Chicago Fed bank President Evans’ reiteration of holding rates at zero until 2016. The news from Greece and Iraq is ugly but no material market reaction has yet occurred. The 10-year is off 2/32 to yield 2.15%.