Bonds Were Hoping For Good News, But Didn't Get It From Jobs Report
Bonds Were Hoping For Good News, But Didn't Get It From Jobs Report
Abstract
The Fed is now at the point of slowing the pace of rate hikes and settling on a "terminal" Fed Funds Rate. Both sides of the market stuck to the familiar trading pattern that merely asks "what's this data mean for Fed policy?" The function is quite clear: stronger jobs data is bad for both stocks and bonds--at least as far as the initial reaction to the headlines are concerned. There's no way to unequivocally confirm it. The market securities sure seem to be convinced.
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If you've been surprised by the extent to which US bonds have been hit by European inflation reports in the past month, you're not alone. Granted, the impact on the US is first and foremost a factor of bigger movement in EU bonds and EU bonds have been selling for other reasons as well, but inflation reports have been one of the biggest. It's interesting, then, to see overnight headlines regarding "record high inflation" in the Eurozone and no major sell-off in the bond market. Indeed ther...
If you've been surprised by the extent to which US bonds have been hit by European inflation reports in the past month, you're not alone. Granted, the impact on the US is first and foremost a factor of bigger movement in EU bonds and EU bonds have been selling for other reasons as well, but inflation reports have been one of the biggest. It's interesting, then, to see overnight headlines regarding "record high inflation" in the Eurozone and no major sell-off in the bond market. Indeed ther...
Today's calendar may have contained what the Fed refers to as its preferred inflation metric (Core PCE price index), but it was never likely to be a big market mover due to the market's established pattern of trading inflation surprises immediately after the CPI data (which comes out 2 weeks earlier). As such, it's no surprise to see no reaction to PCE this morning. In fact, bonds are stronger despite PCE suggesting a sell-off. The only "yeah but" would be that the curve is more inverted (...
Today's calendar may have contained what the Fed refers to as its preferred inflation metric (Core PCE price index), but it was never likely to be a big market mover due to the market's established pattern of trading inflation surprises immediately after the CPI data (which comes out 2 weeks earlier). As such, it's no surprise to see no reaction to PCE this morning. In fact, bonds are stronger despite PCE suggesting a sell-off. The only "yeah but" would be that the curve is more inverted (...
On Friday ,the BLS reported 263,000 new jobs in September, which runs directly counter to what the Fed wants to see.
The post Why a good jobs report is bad news for the Fed appeared first on HousingWire.
On Friday ,the BLS reported 263,000 new jobs in September, which runs directly counter to what the Fed wants to see.
The post Why a good jobs report is bad news for the Fed appeared first on HousingWire.
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Even When It's Good, It's Bad Bonds had a good overnight session with fairly steady gains in both Asia and Europe. The morning was shaping up nicely and, up until 9:30am, it looked like bonds might squeak by with a bit of a victory on the day. But as is so often the case recently, even the good days seem to find a way of turning bad. Today was no exception. A big reversal in UK trading got the party started for sellers, with the Consumer Sentiment data adding fuel to the fire. Fed spe...
It Doesn't Matter if Powell's Speech Matters Some things will be yearned for, anticipated, and sought after regardless of how likely or attainable they are. Applying this general truth to Friday's Jackson Hole speech from Fed Chair Powell, we can rest assured that there's no possible way for Powell to give the market what it truly desires: clarity on the Fed's policy path in the coming weeks and months. All Powell can do is remind the market that such clarity will only gradually come into fo...
It Doesn't Matter if Powell's Speech Matters Some things will be yearned for, anticipated, and sought after regardless of how likely or attainable they are. Applying this general truth to Friday's Jackson Hole speech from Fed Chair Powell, we can rest assured that there's no possible way for Powell to give the market what it truly desires: clarity on the Fed's policy path in the coming weeks and months. All Powell can do is remind the market that such clarity will only gradually come into fo...
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Everyone is tired of the persistent sell-off in the bond market, but weariness is no match for the negative momentum. We've long since run out of ways to make new observations about the same old phenomenon. At times like this, we're resigned to waiting for salvation from data or, more miraculously, by some theoretical level at which traders feel it's time to "buy the dip" in bond prices. There was a potential case to be made for dip-buying when 10yr yields first crested 4.0%. Indeed, some an...
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This morning's centerpiece was the nonfarm payrolls number coming in at 260 versus a median forecast of 200k. Additionally, the previous month was revised up to 315k from 263k. Internal components were mixed with some bond-friendly argument to be made from 3.7% unemployment and a 0.1% drop in the participation rate (effectively a 0.2% increase in unemployment over last month's 3.5%). Despite the counterpoint, the NFP headline clearly argues against a change in the Fed's rate hike outlook.?...
The jobs report is traditionally the most important piece of economic data on any given month. It's even had the power to move the bond market as recently as early 2022 despite the labor market being cemented as a star performer. Now this morning, the jobs report came out roughly in line with expectations, but bonds nonetheless sold off--seemingly in response. But the fact of the matter is that traders often show up to NFP day with trading strategies that aren't based on the NFP results th...
The jobs report is traditionally the most important piece of economic data on any given month. It's even had the power to move the bond market as recently as early 2022 despite the labor market being cemented as a star performer. Now this morning, the jobs report came out roughly in line with expectations, but bonds nonetheless sold off--seemingly in response. But the fact of the matter is that traders often show up to NFP day with trading strategies that aren't based on the NFP results th...