Encouraged by the relatively temperate conditions provided by 9 new session lows since the mid-October bearish reverse, Treasury bears had continued to forage instead of taking to their dens for a long winter nap. Since the bullish reverse of Nov. 6-7 though, in the bullish engulfing, there has been no new lows but rather a consolidation that leaves the bearish contingency edgy and sluggish.
Economic reports have not been so disparaging as to warrant a protracted bullish advance. The employment report released a week ago showed signs of continued job strength and a narrowing of the gap between current conditions and stated Federal Reserve goals. Sure, jobless claims moved marginally higher yesterday though the declining trend appears intact. Further, the Jolt Index showed further gains in job openings, even if the gain was less than anticipated.
Those looking for the U.S. to have completely broken away from the mild but real constraints of being attached to global low inflation and restrained growth in Europe and Japan may have been looking for even stronger economic reports than seen of late. While the impact from spotty global growth and continued deflationary pressures abroad is not enough to derail U.S. domestic growth from its above trend path, it has not been far enough above that trend to encourage more aggressively pricing a Fed move toward normalizing monetary policy.
Unless there is an immediate, think upcoming retail sales and University of Michigan confidence reports today, indication that even greater above trend domestic economic growth is being witnessed, expect the Treasury bearish contingent to take at least a brief nap.