Jobs out – reaction, as expected
Jobs report is obviously out. You can’t miss it. Everyone is talking about the tic down to 10% (!). The markets are reacting as expected: USD is up, Treasuries are down (yield up), Market Up, Gold up. Hmmm. But something doesn’t make sense to me, actually a lot. Analysts and the TV have been telling us that the carry trade is the reason behind the market rise, selling of USD is causing the markets to go up. Well, here we have the USD going up and the markets going up, reversing recent inverse correlation. Then you have the USD going up and Treasuries going down – where are the USD going to be held? Then gold – people said it was an inflation hedge (although the numbers speak against gold as an inflation hedge), then we heard it was a deflation hedge (probably a better argument), then just a bet against all fiat currencies on principle.
In the end, I don’t think this report will have a long term impact. At best the analysts will figure out a way to have it explain the movements of today, when I’m doubtful this precarious rally will hold. There are bigger forces at work that one NFP report, so don’t get too excited in either direction.
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Tags: gold, NFP, payroll, treasuries, USD
General | Yaron Sadan | 
December 4, 2009 9:47 am
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By Yaron Sadan, December 4, 2009 @ 11:52 am
This was written a couple of hours ago. What does it mean that the market doesn’t rally on supposedly good news? Either the news wasn’t that great or the market isn’t that strong to begin with? At least the USD/Equity inverse correlation has stayed the same, except, now it’s really hurting some late comers to the carry trade.