Reply To: Traders Market Weekly: US Elections, Rates and Inflation

#47060
Truman
Participant

S&P futures vs fair value: +45.30. Nasdaq futures vs fair value: +159.30.

The S&P 500 futures are up 45 points and are trading 1.2% above fair value. The Nasdaq 100 futures are up 155 points and are trading 1.5% above fair value. The Dow Jones Industrial Average futures are up 306 points and are trading 0.9% above fair value.

The October employment report had some good in it and some not-so-good in it. Payroll growth was stronger than expected, which is good objectively speaking. Now, speaking in terms of what the market likes to hear at this juncture, the unemployment rate moved up and the year-over-year pace of average hourly earnings growth decelerated. That is not good, objectively speaking, but it is good for thinking that these key components are moving in a direction the Fed wants to see them move.

Ultimately, though, the key takeaway is that the labor market isn’t showing enough weakness yet to convince the Fed that it can stop raising the target range for the fed funds rate.

The Treasury market has been choppy following the employment report.

The 10-yr note yield sat at 4.16% before the release, shot up to 4.20% in the immediate aftermath, and now sits at 4.14%.
The 2-yr note yield sat at 4.75% before the release, hit 4.77% after the release, and now sits at 4.70%.