Jobs number felt across the markets
On Thursday, we witnessed the first time unemployment applications were up after recent numbers were lower, tied to weather conditions where applicants could not get to the unemployment offices.
On Friday the jobs “created” number was reported as 295,000, but once a review of the quality of those jobs as well as the weaker-than-expected hourly wages and labor participation were taken into consideration, the U.S. equity markets went from initial “euphoria” to downright disappointment. The ongoing gains by ISIS, the joining of Boko Haram to ISIS, and the decimation of historic artifacts leaves one to wonder what “progress” is really being made in the attempt to “eliminate” the international threat of these organizations.
A concern over the number of young Westerners eager to join ISIS is increasing, and it appears that the U.S. is “waiting” for the local countries to take the battle to the ground against ISIS. I fear that is a mistake, and the U.S. administration is “frozen” at the “switch.” We will have to wait and see what, if anything, the U.S. will do going forward to eliminate this global threat. Now for some actual information:
The June 30-year Treasury bond closed at 155 21/32ndss, down 3 and 7/32nds, pushing yields higher after the U.S. reported that all 31 banks tested were within the minimum levels of capital required with no additions or surprises. The U.S. also reported on Friday that exports declined by 2.9% in January, its third decline in a row. Bonds have fallen and yields have risen since January, and we see no change in our forecast for prices to remain in a range with movement to be determined by U.S. Federal Reserve action or “inaction” for the time being. However, once again, as I stated in earlier commentaries, the downside risk with the Fed rates at zero leaves no room for further cuts, so prices may have already based for a move up in yields. We continue to favor the short side of bonds.