Although we experienced some slippage this week, it was modest; we expect clients anchors, set weeks back, to hold into year end.
US Treasury prices weakened just post Friday’s Oct Payroll release as observers were quick to note just sub-surface, signs of motion (those debt prices soon reversed on news of more Greek shenanigans). The rise in av hourly earnings by $0.05 to $23.19 was part of that. The substantial upward revisions to the August and September reads were another. Finally, the results of the so-called “household survey” (a tad more volatile and a tad less reliable than the payroll survey) showed that the number of people with a job jumped 277M while the number of unemployed fell, resulting in a 9% print.
Naturally the barn is not alight. But why in the world anyone could have predicted a double dip is beyond us; this read should silence those types. But then, for them, it’s too late. The horse is long gone.
The recommended approach then has not changed. It is best described as one in which traders/planners do not by any means set trades or strategy based on US disappointment, but those based to gain on surprising vigor (there are however no releases next week with market-moving muscle). And part of that “surprising vigor” will be from employers who are cheered by recent developments in Washington, where for an interventionist administration and statist president, their jig is about up.
Our EU friends will keep us entertained, representing a wild card. The elites who installed and the elites who now oversee this machinery won’t accept the fact that it can’t work; they are willfully blind, in a state of complete denial. So we will be gifted no doubt with more violence before this thing is past.
It is in the desk’s advantage to exploit panic to acquire value, as earlier described.
Robert Craven
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