Friday’s better than expected NFP was followed by a strong rally, which faded by day’s end. My guess why is that parts of the BLS data was looked at askance, as the Birth Death adjustment Goosed NFP. When we look at various employment charts, the picture remains downright fugly.
Perhaps that introspective process continues today. Not only about Employment, but about rates also. This is the other headwind the market now faces — rising interest rates. Despite quantitative easing and a zero percent Fed Funds rate, the 10 year Bond has now hit a high rate for 2009.
The Bond sell off, which has been sending rates appreciably higher, is being caused by two distinctly different camps. The first are those who believe that the recession has crested and is coming to an end, that global growth will soon resume, and the Fed will therefore be raising rates.This is the Green Shoot crowd.
The other camp sneers at the Green shooters, but does not disagree with their conclusion that the Fed will soon be tightening. This is the inflation camp, and includes the gold bugs, commodity bulls, dollar bears, and hyper-inflationistas.
With Oil up 100% for the year, and the Dollar down nearly 10% from its recent peak, I find this group harder to disagree with. The irony is that each sees the Fed tightening and rates going higher. This is the conundrum the Fed finds itself in . . .
NFP is . . . -345k (June 5, 2009)
Birth Death Adjustment Goosed NFP (June 6, 2009)
Roundup of Employment Charts (June 7, 2009)