Market Snapshot March 9, 2018

bright room

Good Friday AM,

 

Biggest economic report of the month today. The jobs report (and associated components). It was a blockbuster headline number.

 

  • Nonfarm Payrolls for Feb: Actual 313K, Consensus 205K, Last 200K.
  • Unemployment Rate for Feb: Actual 4.1%, Consensus 4.0%, Last 4.1%.
  • Avg Earnings for Feb: Actual 0.1%, Consensus 0.2%, Last 0.3%.

 

So U.S. employers added the most workers since mid- 2016 as labor-force participation swelled, but the devil is always in the details and below-forecast wages and a downward revision to January’s figure suggest the pay gains that spooked markets last month aren’t yet taking hold. Mix in the Final Trump revision on his tariff plan (final until the next revision) which softened the blow by excluding Canada and Mexico, as well as leaving the door open to exclude others,  the potential meeting with Rocket Man and we have the ingredients for a good stew (disclaimer that I have never made stew nor know the real ingredients for stew). That said, bonds are off and stocks are higher. The tariff news was not as bad as expected, the meeting with North Korea is encouraging (although I give it very low odds of happening) and clearly there is a big blinking neon sign outside that you can see from space saying we’re all hiring. Bonds could be getting hit much much worse and I would have expected them to be down double where they are now but the pesky hourly wage component, which is really the indicator for inflation, was weaker than expected. That’s the lid on the crock pot. The 10-yr is at 2.90% and mortgage bonds down 12bps (I am pretty happy this is where we are). I would recommend locking. Unless there is more unexpected news to move markets (which is really tough to anticipate), it’s a good idea to lock.

 

Enjoy the weekend and first, make today great!