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Even though it’s hard for me to imagine some kind of “shock event” from the pre-open jobs report this Friday, I look forward to seeing how the market – – particularly the bond market – – reacts. The reason is that, in spite of the recent rally lately, the bond market (represented below by way of TLT) is still sporting a very good right triangle reversal pattern, and provided we stay beneath that horizontal line, it stands every good chance of more serious diminishment in price.
Well, that’s that. Bonds have failed their October 2022 lows. Equity bulls will eventually wake up.
Those with adjustable mortgages are going to get seriously disgruntled.
This is rather exciting: yet another failure of a key trendline, this time for the high-yield bond fund.
The Federal Reserve continues to hold an aggressive position on sticky inflation. The central bank recently approved a much-anticipated interest rate hike of 25 basis points, pushing their benchmark borrowing cost to the highest level in more than 22 years.
During its most recent meeting in July, Federal Open Market Committee (FOMC) Chair Jerome Powell announced that the Federal Reserve will continue its monetary tightening, raising the rate to a target range of 5.25% – 5.5%.
The last time rates were this high was when George Bush was still president.
However, the central is not yet finished with its aggressive monetary policy, and there is currently a 20% to 30% chance of yet another 25 basis point rate hike in its upcoming meeting in September according to a federal watchdog, CME Group.
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