We got some much anticipated economic data this morning and there appears to be a huge gap between the markets view of this data and the view of the market commentators. I was on my way in to work when the data was released so I listened to it on Bloomberg radio. They put such a positive spin on every number that I thought Treasury yields must be rising. Imagine my surprise when I get to my desk and the 10-year Treasury price is going straight up.
Below is a screenshot that shows a breakdown of this morning’s numbers:
I took the liberty of highlighting the numbers in green, yellow, or red to point out which direction the releases were in relation to the survey data. Green numbers beat the survey, red were worse, and I used yellow on the Unemployment rate because it was unchanged from last month.
On the surface it might appear that there was more good news than bad. However, not all numbers carry the same importance. The market is reacting this morning largely to the Change in Non-Farm and Private Payrolls figures. These not only missed the estimate this month but were both subject to large downward revisions last month. Notice that in the “Prior” column, last month’s release for Non-Farm Payrolls was -125k jobs…but the revision took that down to -221k jobs. Likewise the Private Payrolls were reduced downward 62% last month. Private Payrolls doesn’t have a lot more room to give on downward revisions before it goes negative.
The 10-year Treasury is up 21/32’s this morning to trade at a 2.84%. We last saw this level on 4/15/09. That’s all the news to report at the moment. If you have any questions on this material or if there is anything I can be doing for you just let me know.
Steve Scaramastro, SVP
800-311-0707
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