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By G. Steven Bray
This could be an interesting week for interest rates. As we expected, last week’s jobs report had very little effect on rates despite the strength of the headline numbers. Markets are focused on overseas events, and it’s one of those events that could make this week interesting.
Wed, the European Court of Justice will announce a preliminary assessment of the European Central Bank’s bond buying plan. If the court rules in favor of the ECB’s position, rates could rise.
Much as they did when the Fed announced quantitative easing, markets are likely to interpret ECB bond buying as reducing the risk of recession for the EU economies. That risk has been much of what’s driving the flight to safety buying of US bonds, which is pushing rates down.
The most significant US economic data this week, retail sales, also falls on Wed. However, I suspect is would take a big departure from trend to make any difference for US rate markets.
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