Bond markets were able to put some green on the screen again yesterday, but that’s not as positive a development as it normally is. We talk sometimes about bonds being forced to rally against their will and the past few days increasingly look like one of those times.
Wednesday’s ADP data gave us a good opportunity to see this play out (bonds normally would have sold-off after such a big beat). Then Thursday’s massive stock market selling at home and abroad only resulted in a modest improvement for bonds.
It seems like it’s only a matter of time before the global flight-to-safety takes a break and bonds get their first opportunity of 2016 to go where it looks like they want to go (higher). Something like a much stronger than expected NFP number could be the sort of thing to catalyze such a turning point. In fact, NFP couldn’t come at a worse time considering it looks like bond markets are already tired of rallying.
If NFP beats big and we STILL don’t see a reversal of recent momentum, it would speak volumes to the legitimacy of fears surrounding the global economy.