All Eyes on Bond Yields

After the first day of trading of April, a relatively uneventful one for the equity markets in general, the most consequential market for me is 10-year yield!

Yield continues to exhibit weakness, and is bearing down on a critical 5-month support level at 2.30%, which if violated and sustained, will trigger downside continuation signals that project to 2.10% optimally, and possibly to 2.00% prior to the next upmove (in yield).

The next catalyst for a directional move in bonds and bond yield is Friday's Employment Report, although on Wednesday morning we could get a preview of the jobs report from ADP. If the markets head into Friday's report ominously leaning on, or beneath 2.30%, weak payrolls and/or wage growth figures will have the potential of sending yield considerably lower. This will put increasing pressure on the Trump Administration to put its aggressive growth agenda on the front burner -- and on a high flame!

Otherwise, it may well be that the still-sluggish hard data is starting to undermine very enthusiastic soft (sentiment and confidence) data, which IMHO will impact equities negatively (unless the Fed sends signals that it is willing and able to reverse its "tightening cycle" after moving from near-zero up to near 1% Fed Funds).

This will be positive (obviously) for the bond market, and positive for commodities and precious metals.

All eyes on 2.30% in 10-year yield starting on Wednesday morning, in reaction to the ADP Report, into Friday's Jobs Report.