Bond markets were relatively subdued yesterday as the Fed Open Market Committee raised the federal-funds rate for a sixth consecutive time. Perhaps traders were saving their energy for Friday, when payroll data is scheduled to be released. The last time around, on January 7, it was “Bonds Gone Wild!” The futures moved almost three handles that day, settling near the middle of the range like a snake-bitten mongoose crawling into the bush to die.  

What might we expect this Friday? Lately, we’ve been advertising a potentially important target not far above, at 115^07. That’s a hidden pivot worth trying to short, but it also has the potential to cap the bull cycle begun two months ago from around 109. We’re not turning bearish on the bonds, mind you – not after cheering the rally on since summer. But we will nonetheless remain open to the possibility that the presumed impediment just above is quite solid.  If payroll stats due out Friday are stronger than expected, it could very conceivably provide the hook to push bond prices lower, at least for a spell.

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