MARCH’S JOBS DATA DUE TOMORROW AT 8:30

Technologies staged a handsome advance yesterday as the President is proposing a $2.25 trillion stimulus that could potentially reward ESG investing.  At this juncture stimulus is a good word.  However, at some juncture it may become a bad word as both cost push (wage) and demand pull (product) inflation further accelerates amplified by insatiable demand for funds by the US government to pay for this spending.

Tomorrow March’s BLS employment report is released.  Will it show an upside surprise?  The odds suggest yes as the ADP Private Sector Employment Survey was stronger than expected.  Consumer Confidence was also greater than expected, the result of the increase in the number of jobs available.

A major issue at hand is tomorrow equity markets are closed and the bond market closes at 1:00 as it is Good Friday.  Trading staffs will be thinned at best.  I vividly recall 1994 when the employment data was released on Good Friday and the bond market sold off around 8 points because of the dearth of participants. Equity volatility increased dramatically when the markets reopened on Monday.

Consensus is expecting a 6.0% unemployment rate, a 638k and 650k increase private sector and non-farm payrolls, respectively, a 34.7 hour work week, a 0.1% increase in average hourly earnings and a 61.5% labor participation rate.

Many times, I have commented about the violent rotation.  Bank America remarked yesterday “outwardly markets look pretty calm but beneath the surface the churn has been the most violent in history.”  The Bank further stated the rotation is being exacerbated by “the most concentrated market in history which in turn could take a prolonged period to unwind.”

Continuing with the violent rotation theme, Treasuries had their worst quarter since 1980 according to Barclays.  Few have recognized the carnage that has occurred in “a risk-free investment.”  Perhaps attention will become riveted when the 23% drop in the largest long dated Treasury ETF (TLT) increases to a 40% loss if 10-year yield rises to around 2.5%.

What will happen today?

Last night the foreign markets were up.  London was up 0.45%, Paris up 0.22% and Frankfurt up 0.33%.  China was up 0.71%, Japan up 0.72% and Hang Seng up 1.97%.

The Dow should open flat but the NASDAQ about 0.5% higher on the ESG euphoria surrounding the President’s infrastructure speech.   The ISM Manufacturing Index is released at 1000.  Will this top tier data point impact the markets?  Most will scrutinize the prices paid sub index for pricing pressures.  The 10-year is up 7/32 to yield 1.72%.

 

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