Wow–normally the ADP employment report gets little respect–but today with a tremendously strong report (versus forecast) investors of all sorts are taking note.
ADP claims that 497,000 new jobs were created in June–versus a forecast of 220,000.
The official (government) jobs comes out tomorrow and the forecast is for 240,000 new jobs – if the number comes in strong – say over 300,000 I think we are very near to cementing a FOMC rate increase the end of the month–and many folks proclaimed ‘they are done’ after the rate pause n June so reactions may be strongly negative.
We are seeing interest rates up strongly with the 10 year treasury trading at 4.06% right at this moment – up 12 basis points from yesterday which was up 10 basis points from Monday. A 2 day increase of nearly 1/4% should be considered very strong – and damaging to preferred shares and baby bonds. We need interest rates to flatten a bit-preferably now (of course I am talking my book here).
Many banking and insurance preferreds are off 1-3% – ouch. Glad I am well diversified and don’t hold large positions in any particular issue. I have to pause and think about the wisdom of moving ahead with more banking buys at this moment–need more data once again. Will these issues present better buying opportunities in the weeks ahead? Certainly that could be the case.
Let’s see the official employment report tomorrow and the CPI and PPI reports next week–if they have even a little bit of heat to them then the rate increase is baked in for later in the month.