Payroll October

So another payroll came and went,  so the number was 60 K less than expectation but within the margin of error of 200K. So, NO CHANGE detected in direction of US labor market, but what is worrying is the softening of Retail Sales and manufacturing data ex autos.

On other hand, stock markets  after almost  "flash crashing" (SP Dec Fut from 1926 to 1884, rallied by end of the day to 1943) but tellingly the 30-year bond didn't undo entire rally and here it seems that the equity  markets have been pumped up to be dumped again later next week.

Dead On Arrival: China / GCC / EM reserve unwind and US Treasury Yield blow up

The hot topic is how the unwind of  the FX reserves will lead to a blowing up of US Treasury yields especially on 10-years and longer maturities.... added to the Risk parity portfolios.. but really???.. more to be added.

Fridays without perspective aka US Non-Farm Payrolls

US NFP printed 173K (seasonality adjusted!) for the month of August and the labour wage growth was 0.3% m-o-m, unemployment rate was 5.1%. 

Reactions:
September hike on table based on Un-employment rate  Vs.  No point in yelling for it due to low headline NFP no.

Perspective: 

Long-term NFP is  trending near 200K per month over past 6 months, monthly miss of 40 K doesn't even register, according to BLS:"An over-the-month employment change of about 100,000 is statistically significant in the establishment survey"....Oh, so the miss/beat of 50 K that the market cries about ? Well.. and this number itself is seasonality adjusted, oh great..., now where have we seen this before? Hmm.

The unemployment rate: Derived out of survey of households, moves in opposite direction of participation rate and even less reliable. 

Labor data over 3-4 month may be a good way to judge direction of economy but a single reading available each month doesn't affect anyone except intra-day positions on the data release day.

Frankly, we are not any wiser after yesterday's data, and as many "pundits" have pointed out, one hike of 12.5 or 25 bp should n't keep anyone awake but that's for another day.

About the blog

As a student (try to be) / observer (for sure!) /  participant (on a Higgs-boson scale:) ) of the markets, trying to keep a log of thoughts to look back. Mostly, borrowed and some, personal opinions on random topics in financial markets .