Rate update: Onset of the summer doldrums

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By G. Steven Bray

For rate markets, it’s been a summer of headlines and volatility so far, especially Greece and China, so the onset of the summer doldrums feels somewhat odd. The summer doldrums kick in as investors take vacation, and market movement seems to slow down. Fortunately, prior to that onset, market sentiment seemed to have balanced. While investors are still concerned about the effects of a pending Fed rate hike, other factors are pulling rates back, including some weak economic data last week.

This week’s economic calendar provides some housing data but little else. Absent some truly unexpected results, it’s likely rates will hang in a narrow range looking for the next source of momentum. During the doldrums, that could take weeks. I’d say the most likely candidates at this point are US jobs data in two weeks or further weakening reported out of China. The former could move rates either way. The latter could start another rate rally.