Once again we had a strong jobs report today – or at least we had fewer initial jobless claims than expected. One more arrow in the quiver of the Fed for a 50 basis point rate hike on 2/1. Initial claims came in at 204,000 versus a forecast of 223,000.
While equites fell pretty hard on the jobless news and have stayed down interest rates which ‘popped’ 5 basis points are now down around unchanged–actually up 1 basis points.
A quick scan at the preferred stocks and baby bonds finds them mostly green–again. It is obvious that bargain hunters are on the hunt after the December sell off – there remains decent buys out there even after this nice bounce. I see that the Affiliated Managers investment grade baby bonds are still yielding around 6.6% to 6.7%–they were 6.9 to 7% last week.
Haven’t looked at my accounts today, but expect to see them green–doubt I will do anything today.
3 thoughts on “Strong Jobs Report Knocks Stocks Down – But Interest Rates Near Flat”
There was a long and tedious article in the Wall Street Journal yesterday, full of he usual hemming and hawing that Fed watchers love to do. Are stocks too high? Are jobs too good? Are commodities going back up? And rates, how high, how long, etc etc (“We speak of things that matter with words that must be said.” – Simon and Garfunkel.)
The key point was ~12 paragraphs down. Current bets are for two more 2023 increases, 0.25% each, next one in February. The Journal pegged a 0.25% increase at 70% probability.
It seems to me most of the downside risk in rate-sensitive issues was squeezed out in 2022 with the leap from zero to four-ish. The next bumps should be easy enough to handle. (The mule teams pulling the wagons going West get broken in first few days out of Independence. So the ride across the Plains is smoother sailing. – How The West Was Won.)
Interest rate risk is mostly been priced in already and improving.
Credit risk for companies that will blow up eventually in any non zero rate environment without stimmies is the remaining risk.
( “Everything is dust in the wind” – Kansas)