Freaky Friday

 

The release of the Non Farms payroll number (published by the Bureau of Labor Statistics usually on the first Friday of each month) always provides certain white knuckling across the capital markets and the industries that rely on their gyrations.

It has proven to be a meaningful indicator of domestic economic trends, and also a key metric used by the Fed to project their balanced policy between employment and inflation.

The jobs report missed expectations…bigly!  Economists were coming off a robust ADP private sector payroll boost on Wednesday, and they expected the BLS number to be greater than 180,000 jobs added.  The report stated only 98,000 added, along with a downward correction of a bullish January and February jobs numbers.  Retail jobs cratered (-30,000) while construction adds were measly (+6,000).

These weak numbers were preceeded by even more flight to qualify events.  Last night’s Tomahawk fusillade of Syrian Air Force base added a huge dose of global volatility to anyone’s calculations.  This region is the crossroads of so many balls in the air;  refugee crisis, ISIS, WMD, energy and maritime routes.  Mix in the exigencies of the  Middle East power vortex with the boiling point of USA-Russia theatrics, and there is no algorithm to lean on.

Normally a one-two punch of bad jobs report and global conflict will ignite a huge flight from equities into bond safety.  And according to form, the bellwether TNX 10 year treasury opened 7 basis points lower than Thursday’s close.

But along came Bill Dudley from the New York Fed.  He alluded to a need to really look at Dodd Frank and was a bit dovish in predicted Fed increases this year…catnip to equities market makers.  He also referenced the unwinding of the Fed Balance sheet (one of my favorite storm cloud topics) and how that could temper Fed rate normalization.

So we had a big move away from bonds back to equities, and a TNX yield increase from 2.27 to 2.37 (as I scribe this).  In capital market terms….and on Main Street, thats a lot of zeros.

Hang on tight…