First, the unemployment report offered no surprises as the market was close to the actual release. The real surprise was in the upward revisions to the February and March numbers. The negative surprise was the average work week shrinking by 0.2% of an hour. The shorter work week may be an aberration but it may mean that employers are cutting workers hours so as to keep under the Affordable Care Act mandates, but I caution it is far too early to say that this is definitely occurring. The BOND markets reacted negatively to the “stronger” jobs data and the 10-year note future fell as yields rose by 10 basis points. Investors bought stocks and seemingly sold bonds in a performance of risk-on/risk-off. Again, one day’s action does not a trend make. The pure risk-on/risk-off paradigm has been dormant for quite a while and let’s hope it stays that way.
Posts Tagged ‘Weidmann’
Notes From Underground: Happy and Healthy New Year to All of Those Celebrating
September 16, 2012Last week we covered a great deal of ground on the economic front as the world’s central banks, from Beijing to Washington were busy generating versus types of stimulus programs. The Chinese government aided the cause by announcing an infrastructure program of $157 billion in an effort to generate even more stimulus to a slowing economy. As the Chinese authorities begin on a path of shifting the export model to a more domestic consumption type growth plan, there is a great deal of excess Chinese capital development that needs to be utilized and the slowdown in global economic growth mandates a shift in priorities for the POLITBURO.
Notes From Underground: Draghi … Could’ve, Should’ve, Would’ve
August 8, 2012The interest rate variable is alive, well and affecting global markets. Mario Draghi has played the “WIZARD OF FRANKFURT” as he has sought to forestall a financial implosion of Europe. Draghi’s comments in London on July 26, in that the ECB would stem the crisis at end with the tools at its disposal, markets had to believe that ECB policy would be “SUFFICIENT.” As we all know by now, President Draghi has been successful as the Spanish and Italian yield curves have steepened and the 2-YEAR NOTES have seen its yields dramatically drop–the Spanish went from 7% to 3.73%.
Notes From Underground: Unemployment In the U.S. Was Much Ado About Nothing
August 5, 2012The better-than-expected NFP number–163,000 net job gains–was above the consensus of 105,000. Average hourly earnings and hours worked were weaker than projections while the over all rate went up to 8.3%, leaving all the talking heads with something to either like or dislike. In my mind it is highly doubtful that the unemployment data was responsible for the 2% increase in the S&Ps, which brings back the Spanish and Italian 2-YEAR NOTES as the key variable.
Notes From Underground: The FED CHECKS; Now it is up to the BOE and the ECB
August 1, 2012No surprises from the Bernanke FED today as the U.S. central bank held to its previous policy as it awaits further developments on the U.S. economy and possible stresses from Europe. Chairman Bernanke held true to his form and did NOT BAIL OUT THE CONGRESS BY FULFILLING SENATOR SCHUMER’S FANTASY OF BEING THE ONLY GAME IN TOWN. Three cheers to the FED for not being the politician’s patsy. It is up to “leadership” in the executive and legislative branches to deal with the coming FISCAL CLIFF. Now the BOE and the ECB will be on the hot seat and the market senses that the U.K. will cut rates and possibly add to its QE program as the British economy has been showing renewed signs of slowing.