So we have had lots of action in stocks and interest rates this week and now we are staring into what will ‘set the tone’ for the next few days–the monthly employment report.
Normally the report can be kind of a yawner, but this time it is different. This time we have 2 distinct camps–1 camp is the “recession is coming” camp and the other is the “the economy is weakening but solid camp”. This sets up a possibility of a wild market day–both in interest rates and equities.
So here is what we are looking at. The estimate for tomorrow is for 147,000 new jobs being created with the unemployment rate remaining flat at 3.7%.
Last month was kind of soft with 130,000 jobs being created.
I think it is safe to say that 130,000 to 150,000 new jobs will be the Goldilocks numbers. Above 150,000 the bullish camp declares victory and we see common stocks shoot up 1-2% dragging interest rates along–moving the 10 year treasury up 5-10 basis points.
Below 130,000–in particular something below 100,000 we see stocks sell off again and interest rates, now in the 1.54% area fall by 5-10 basis points.
Of course we will just watch and likely do nothing as reacting to news quickly is almost always a mistake.
Buckle your seat belts!!