Please enable javascript in your browser to view this site!

POST NFP Update- Treasuries surge, while equities back off

Post NFP, giant rally in Treasuries on much worse than expected 38k jobs created vs 160k expected..  Over 450k people left the workforce, so despite the drop in unemployment, this data is misleading-  The end result is that a chance for a June rate hike has become far less likely as Fed Fund futures now reflect only a 22% chance for June hike and less than a 50% for July.   The 10yr yield has moved down to 1.70(important support) while gold and silver have turned back higher sharply.  2 yr yields in US down to April lows, UNDER 80 bps,  so a very dramatic move here after nearly 2 weeks of churning-  and German bund yields trading down to near April lows.. < 8 bps. DXY selling off fairly meaningfully, with USD weakness v Euro, Yen, Aussie $ and vs most Emerging mkt currencies-Yield curve steepening across the board-   Overall bonds and stocks moving in unison has been rare and in the last couple days, the failure of yields to lift was a minor concern to think equities move straight up over April lows-  However, on a DOWN day today in Equities , this would mark only the 2nd time in 10 years that stocks had hit new 3 month highs the day before NFP and closed negative out of 16 occasions-  Yields and the USD should be key in this regard.  For now, a few counter-trend buy signals emerging in YIELDS which will take a few days to pan out, but does suggest this move might be overdone in Treasuries- The ability in the days ahead for 10yr holding 1.70 and turning back higher, and similar for bund yields, which could help equities move back up towards the highs -  early weakness in Bank shares as might be expected with huge Treasury rally, BAC -2.3%, c -2.3%, GS -1.7%, JPM -1.7%, MS -1.9%, WFC -1.4%.   Advancing stocks this am thus far:  TLN, AMBA, AVGO, NSAM, ARIA, AKAO, CLNY, WFT, GPS.  While on downside-  ZUMZ, ONTY, IMMU, WRES- 

BOTTOM LINE- unless S&P gets under 2082, this dip should be buyable into early next week and no real damage done.  It's worth pointing out that SENTIMENT will turn much worse as a result of today's poor Economic data while stocks really haven't shown that much weakness

S&P down to near weekly lows, but until/unless this is broken, this should be a buying opportunity and not a reason to think a big selloff is getting underway.  2082-3 important on the downside, and for now.. prices were not abnormally weak as has been seen in recent years when Eco data misses far worse than expectations.  For now, this trend has stallled only near April highs, but no real weakness


Big Spike down in 2 yr yields reflected the economic weakness in the data this am, and Chances for June rate hikes normally move neck and neck with the 2 yr yield

10 year yields got down to key 1.70% support and its likely that yields hold here and turn back higher next week, as this area is important and has held twice before

the US Dollar index made a large decline this am, as Gold and Silver surged.  In the near-term, the trend has stalled and turned back lower for DXY, but should find support in the upcoming 2-3 days and attempt to push higher again