Via The Daily Bell
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From Steven Englander of Rafiki Capital
Even when non-farm payrolls (NFP) are as neglected and downplayed as this time around, you have to ask yourself what it would take to make them meaningful. The reason for the markets disinterest is that no one thinks the Fed is going to raise rates earlier than December and we have four more payrolls releases beyond tomorrow's release before they have to decide. And even though Janet Yellen has been certified as a ‘low interest-rates person’ she is unlikely to cut rates any time soon.
With global stock indices - and the S&P - both just shy of all time highs, even as bond yields stubbornly refuse to validate the "equity upside" story, Bloomberg's macro commentator Richard Breslow, looking at recent yields and spreads writes that "in reality, these spreads just can’t be doing what they’re doing if the tapering and rate-hike stories were truly being given credibility" and has a troubling thought: "what is bond yields have been right all along"?
At 8:30am on Friday, the BLS is expected to announce that in July the US created 180K jobs, down from 222K in June though still in line with the 6-month average of 180K, with the biggest downside risk a slowdown in durable manufacturing payrolls as auto production slumped.
Sellside expectations:
On one hand, credit investors have never had it better with IG credit spread at record tights and junk bond yields sliding to 3 year lows
On the other, and this is linked to the above, they have never been more nervous, and as the latest Bank of America credit investor survey shows, more worried about the Fed in general, and "Quantitative Failure" in particular.
But why, if as so many claim, the Fed has nothing to do with the the return of risk assets? Ignore that, it's rhetorical.