Two reports and a balance sheet:
- Payrolls: headline +253k, expected +178k; avg hourly earnings +0.5%, expected +0.3%. Expansionary.
- PMI Manufacturing: 50.2, expected 50.4; weak – contractionary.
- Fed Balance Sheet: -58.7B w/w, previous -30.5B. Deflationary.
The Fed raised rates at this week’s meeting by 25 bp to 5.08%. Is Powell going to raise rates again? CME Fedwatch tool says probably not at the next meeting – just an 8% chance. Employment is still very strong, and if the little people have jobs, that’s bad, because … inflation. Or something. Of course, Powell does his best not to say this, but I believe the strength of the labor market is a prime reason why he continues to raise rates. The risk-asset market’s reaction to Powell’s mostly-not-pivoting press conference was to sell off, while gold & silver rallied.
Here’s Friday’s rate chart. My goodness, check out that 1-month Treasury yield: it shot up 111 basis points (to 5.46%) in just one week! I can’t really say why the yield jumped so dramatically, although it does bring the 1-month yield into closer alignment with the new Fed Funds rate. See the 4-week auction results at Treasury Direct, in case you are geeky enough to want to know the details. Are people panicking out of the 1-month due to the threat of the Biden-Handler debt-limit default? That would be a first. But it is possible, I suppose. There weren’t any lack of bidders during the auction. so I really don’t know.
The market’s reaction to payrolls, two days post-Fed, resulted in an equity market rebound, while gold & silver sold off. Of course, prices in equities rallied Thursday overnight prior to payrolls, and the price of gold & silver plunged overnight as well. It is as if “someone” already knew what was supposed to happen. Not sure why the rally since unexpectedly strong payrolls means more rate increases. At least theoretically anyway.
Every Payrolls Friday, I take a look at the workforce disability data (FRED: LNU01076955, LNU01076960) to see if vaccine injuries are increasing or decreasing in the civilian labor force (men/women 16-64, either working or looking for work). How is that going? Well, disability (reported monthly) has a rough seasonality, which I try to eliminate using an MA12.
by thc0655 
