The Bureau of Labor Statistics released a weak job report last Friday. It reported the U.S. economy added only 12,000 jobs. The Dow Jones estimate called for 100,000. Stock markets rallied in response. The Nasdaq (QQQ) rose the most, gaining 0.8%.
While markets are betting that the Federal Reserve will cut rates in response to weak jobs, the hurricane and strike activities last month skewed the data. Boeing’s (BA) union workers pulled manufacturing jobs lower. Investors need to adjust the report with those considerations.
Both the 10-year and 30-year Treasury Bond yields rose in response. The debt market is increasingly doubtful that the Fed may cut rates by much. A regular 50 bps cut is unlikely, while a 25 bps cut is probably. Even so, this is already too much of a cut. Bond investors should avoid the long-term Treasuries for now, especially the IEF and TLT ETFs.
November’s stock trading will try to snap from a 1.4% loss in the S&P 500 and a 1.5% drop in the Nasdaq in the last week. This is not an easy task, as stock indices are near all-time highs. In addition, Bitcoin slipped below $70,000 at the end of last week. It indicated that speculators are booking profits, and parking their cash back to the U.S. dollar (DXY).
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