The May employment report was one of the most anticipated in years.  After all of the volatility recently, the data has become unpredictable and generally wide of target.  This time however, the data was about in line with estimates leading to adjustments, but no major market swings.

The data however, has not removed the QE uncertainty.  Many believe that the Fed is unlikely to reduce its asset purchases after the rate climbed from a four year low in May.  In the view of many forecasters, the Fed may want to see four months of job growth of 200K or more before beginning to taper off its purchases:  an important clue to the outlook for monetary policy.

With still very mixed opinions about what the Fed may do, it is important to focus on technicals, the real measurement of what investors and traders are actually doing rather than all the rhetoric and opinions.  Until those levels give way, we expect rates will increase about 10-15 bps on the 10 yr. and at least 10 more basis points on the 30 yr. mortgage rate.

- Michael Corboy