From Bloomberg’s Richard Breslow
Non-farm payrolls are coming. There’s no shortage of opinions on what the numbers will be. And if they come in as widely expected, they’ll be pretty good. Good enough that had this been last month, we’d still be having the tiresome “every month is live” debate.
This time around, markets may have to deal with how to trade a result where the number is sound, maybe even outright strong, and we’re still on perma-hold.
A weak number will stink for the economy but is relatively easy to react to. As long as you can force yourself to close your eyes and buy bonds and, ultimately, equities at arguably distasteful levels.
The world’s woes, from the U.K., to Europe in general, Italian banking or China were not solved because we had one quiet day of news flow. I was told multiple times yesterday morning (not so much in the afternoon) that risk is on because there’s no new bad news. Ugh.
The Fed isn’t going to pivot to everything’s rosy out there on a good number. Unless they want to look stunningly parochial and unaware. In this perverse environment, a shaky landscape gives them optionality on rates; it doesn’t control their actions.
A back-up in rates on a good number has to be taken in the context of other central banks continuing to compress yields with gusto. Who’d have thought the search for yield would make Treasuries look like a bargain at these levels. Everything’s relative. Buyers on dips will be there.
For equities, at the end of the day, dividend yield and friendly Fed will continue to support. They’re a rates play.
The dollar will love it. And should. That’ll also suppress yields and weigh on commodities. Oil just doesn’t seem to like it above $50.
A strong number will be a relief, but not a game changer.
via http://ift.tt/29s4tax Tyler Durden