how will rates react ?

Last week, rates ended slightly better than where they began as we predicted. The holiday shortened week ahead is packed with high impact reports including the all important Jobs Report which is scheduled for release on Thursday before bond traders head out the door to celebrate Independence Day. So how will rates react when all the fireworks are over? Read on to find out.

Last week, the Fed performed a high wire act leaving rates unchanged while balancing inflationary fears in the statement released just after the conclusion of their two day meeting. But will this week's economic news continue to calm fears or will they return?

The shortened holiday week ahead begins with a bang when the Chicago PMI report is released on Monday. Tuesday, the ISM index takes center stage. However in all likelihood most bond investors will be focused on Thursday's Non-farm Payroll Report. Economists are predicting that the net job loss for June will be to the tune of 50,000. However, the headline number will be only half the story. When the Jobs Report is released it generally includes revisions to the past months as well. If it appears more jobs were created than was reported and/or predicted, expect rates to move higher. On the positive side, if less jobs were created rates may likely fall further.

The bottom line: With a full slate of high impact reports, expect rates to be volatile.