10Y dollar economy FX jobs NFP unemployment

Manic Markets Reverse Jobs Knee-Jerk, But ‘There’s No Chance Of December Hike’

You want a reason to be dovish, you've got one now.

Talk about laughable.

The knee-jerk move lower in the dollar and yields reversed course in what, for humans anyway, was the blink of an eye.

Of course to the machines it’s a veritable lifetime, so I guess we can write off the initial move lower to the algos “who” probably interpreted things correctly because it’s hard to spin the “dismal” out of that data. Have a look at this:


As for the reality of the situation (because we can’t divine anything about reality from that for obvious reasons), we go to Bloomberg’s Mark Cudmore:

There’s no chance of a Fed hike in December. The higher unemployment rate despite a flat participation rate and poor earnings all round, combined with Thursday’s core PCE print just make it impossible for Yellen to justify hiking in 2017 — and that’s even ignoring all the turmoil around the debt ceiling and balance sheet reduction.

We concur – for now.

Jefferies figures “it’s going to take more than one data print to start a meaningful trend lower in the dollar.” We assume they mean meaningful “new” trend lower, because it’s been a one-way ticket since March.

“It definitely doesn’t help the dollar at all, but I’m not sure it’s going to be the death knell that sends us another leg down”, the bank’s Brad Bechtel continued.

As for Treasurys, despite the above common sense assessment from Cudmore, Treasury futures have given back their initial gains as traders apparently think this is still consistent with 30% odds of a hike by year-end.

Seaport isn’t sanguine. “The August jobs and earning figures were bad all around and that combined with hit to economy from Hurricane Harvey will keep the Federal Reserve from raising rates again in 2017,” the firm’s Tom di Galoma, says, before taking it one step further: “This may even give the Fed pause on planed balance sheet changes.”




3 comments on “Manic Markets Reverse Jobs Knee-Jerk, But ‘There’s No Chance Of December Hike’

  1. And let’s keep an eye on Irma. For if Trump, Harvey and the insane markets foreshadow anything, it’s that this Irma might not be an Irma la Douce. They’re already talking about a Cat 4,, and possibilities “range from a landfall on the Leeward Islands in the northeastern Caribbean to the Carolinas and the island nation of Bermuda – and everything in between. There’s also a chance the system drifts into the Gulf of Mexico.” Another once-in-a-millennium like Harvey tsunami whacking the Southeast US won’t do any wonders for life, limb or the economy, will it?

    • Just read an article on Tampa Bay, Clearwater area.
      West coast of Florida
      Irma in the Gulf won’t be pretty.
      Read that ” Orange Man” didn’t sign up for this.
      Karma is a bitch, and Mother Nature always bats last.

  2. As I read this,, with all I have read on this site as part of a frame of reference, at once the reality and surreal nature of it all is so incredibly striking. In the same way that Trump could possibly be a nonfiction event and exist on earth, that he exists on earth as a president, and that he exists on earth as the President of the United States is at once reality and the surreal nature of it so incredibly striking.

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