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Strong Employment Numbers Can’t Move Interest Rates

The official government report on employment showed that 225,000 new jobs were added in January–against a forecast in the 165,000 area. ADP had claimed a gain of 291,000 new jobs in their report on Wednesday–but folks don’t pay too much attention to that number as it usually varies substantially from the government number–this time it was directionally correct.

You would think with this strong number and a 3 month average in the 210,000 area that interest rates would move higher–but no–the 10 year treasury is off 4 basis points–moving just below 1.60%. Most certainly the bond market is reacting to the relatively stable wage growth rate which continues to show around 3% or so wage growth–not bad, but not something to worry about

For us this is a fairly strong signal that we won’t see a recession anytime soon–absent a black swan event. I believe that someday (When? Who knows) this will end badly for stocks and bonds–but one could have said this for years and years. Having money in a jar buried in the backyard has continued to be a really poor investment.

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