Monday, December 11, 2017

Monday Morning Bond Market Round-Up

The Corporate Curve is Also Compressing

The top chart shows the 1-3 year corporate market, which is now near it's highest level for the year.  The 3-5 year sector (second from the top) is also rising but is below its yearly high.  The 15+ year sector of the market (second from the bottom) is declining.  As a result, the corporate yield curve is also compressing (bottom chart).

Treasury Market ETFs Show the Treasury Curve Compression

Charts of the treasury market ETFs show why the yield curve is compressing.  The short end of the market is selling off (top chart) the belly of the curve is flat (middle chart) and the long-end of the curve is rallying (bottom chart).  As a result:

The yield curve flattens.

Job Growth is Strong Enough to Support Another Hike

The 3, 6, and 12-month averages of payroll job growth area all above 170,000/month, which is strong enough to support another hike from the Fed.

Keep An Eye On Oil

The weekly oil sector chart is right at the 200-week EMA with a rising MACD.  So far this expansion, we've been very lucky when it comes to oil prices.  However, should they continue rising, we may have a problem.