August 10, 2015

Last week in review:

The news coming out of Greece last week continued to support the idea that Greece will be seeking a rescue agreement within the next two weeks, allowing them to make a €3.2 billion payment that is due to the European Central Bank.  Over the weekend, talks surrounding the total €86 billion bailout continued, and there is continued optimism that a deal will be made before the August 20th deadline.

In regards to economic data last week, the key releases were the PCE core inflation rate, and the employment report on Friday.  We started the week on Monday with the PCE core figure, the Fed’s preferred measure of inflation, which came in at an annualized rate of 1.3%, up from 1.2% the previous month.  On Friday, the employment report revealed an increase in non-farm payrolls of 215,000, with the unemployment rate holding constant at 5.3%.

This week:

The 10 year treasury yield is up this morning to a 2.22% following a small sell off in the bond market today.  Over the last week, the rate dropped through the 2.19% resistance level and went all the way down to 2.14%, bouncing right off the bottom of the range.  2.14% is now our resistance level, with some additional small resistance below that at 2.10% if we were to go through 2.14%.  On the upside, the next major support comes in around 2.50%, with the top of the range being near 2.65%.

As for economic data this week, it should be relatively light, with the key figures being Thursday’s weekly jobless claims, as well as the Producer’s Price Index and University of Michigan’s Consumer Sentiment on Friday.

Eric Swanson, CFA