Good Morning on this fantastic Friday,
The wild ride continues today with the release of the jobs report. I read the report and thought it was fairly unimpressive. Yes, the number of jobs created was a bit stronger than expected, but hourly earnings and the unemployment rate were both weaker than expected. Additionally, the share of the population that is working or looking for work — fell to 62.2%, the lowest in three months, and the rate for workers ages 25-54 edged lower. I don’t pay much attention to the headline hire number, as that is not only going to be revised but also doesn’t mean much all by itself. That the unemployment rate ticked up and that hourly wages ticked down is a better indication of where the economy is pointing. The U6 unemployment rate, which is a better indication of unemployment as it take into consideration both the unemployed and underemployed, is at 7.1% (yup).
Bonds (and now also equities and crypto) are starting off in another hole. Yesterday we were fortunate that as the European desks closed, the US desks started to recover, and we are seeing a little of that start right now. That said, typically as we saw Wednesday with the Fed policy announcement, the markets react to the Fed guidance. However, for the time being, the markets are in front of the Fed sending the signal that the Fed announcement was not hawkish enough (again, for the time being) to curb inflation. Sentiments that several economists and past Fed members are echoing. For now, instead of the horse pulling the cart, the cart is pushing the horse.. That doesn’t usually end well for the horse or the cart.
Please remain safe and healthy, enjoy the weekend and first, make today great.