Payrolls in December increased at the slowest pace since January 2011. The unemployment rate dropped to 6.7%, the lowest since October 2008, as more people left the labor force. Inclement weather may have played a role in depressing payrolls during the month. The figures showed 273,000 Americans weren’t at work because of weather. Factory payrolls increased by 9,000 in December following a 31,000 advance in the previous month. Economists had projected a 15,000 gain.
Equities: Is an MAR14 E-mini S&P 500 (CME:ESH14) top in place (for the short term)? We believe it might be so. This market popped above 1840, but is now up 1.50 points to 1834.50, and we would not at all be surprised to see more selling over the next few weeks causing the market to approach 1800. Technically the market tried to breach its recent high of around 1844, but could not even hold a long time above 1840. We think this recent bull run is getting out of breath at these levels, and believe a very healthy pullback to 1800 could be on the horizon.
Bonds: The MAR14 U.S.30-year bonds (CBOT:ZBH14) are up 28 ticks to 130’07 after a very subpar 74K jobs reading. We now believe that the bonds may have even found their short term low at right below 128. We may start to see a bond rally, especially if the stock market has found its high and starts to head lower. Even with the 6.7% reading on the unemployment, we believe the bonds may rally because the jobs number was not high enough to really cement the near term tapering schedule, and furthermore, the bonds might rally from here because of a perception that the economy may be taking a breather in terms of growth.
Currencies: The MAR14 U.S. Dollar Index (NYBOT:DXH14) is down 30 ticks to 80.84 on a subpar jobs number. We actually still believe the U.S. dollar has very bullish fundamentals going for it. If the Fed keeps on a steady tapering schedule, we believe the dollar will be supported, and may still head higher approaching 82. Today it is weak though. The MAR14 Yen (CME:J6H14) is rallying today, up 43 ticks to 95.91. The MAR14 Swiss Franc (CME:SFH14) is also strong, up 72 ticks to 110.86. The MAR14 Aussie (CME:A6H14) is also having a big rally today, up 84 ticks to 89.34.
Commodities: FEB14 gold (COMEX:GCG14) has jumped today on a lackluster non-farm payrolls report, up $14 to $1,244. We would not be surprised at all to see gold head higher to $1,275. FEB14 WTI (NYMEX:CLG14) is up $1.15 to $92.83. To us this still looks to be in a recent downtrend, and we believe the down-move for WTI is not complete yet. We would not be surprised to see a test of the $90 level. MAR14 copper (COMEX:HGH14) is up after taking a beating yesterday, higher to $3.337. We believe copper could continue to head higher going forward, and this year approach the $3.50 level.