June 7. Disappointing payrolls

It seems to me there is no way to put a positive spin on the jobs report, with an increase of only 41k private payrolls.  Going forward many domestic stimulus measures are expiring, and the idea of fiscal austerity has taken hold throughout the industrialized world.  Government spending was supposed to be the spark to catch organic demand fire, but high debt levels have acted as a wet blanket, as has uncertainty regarding gov’t policies.  In any event, Friday’s markets sent unambiguous signals, with copper plunging to a new low, down over 14 cents, even as gold rebounded.  The ten year yield sank 18 bps to 3.20%.  Stocks tumbled. Continued bad news out of europe- rumors of French bank derivative problems and possible default in Hungary- only added to the negative sentiment.

–Further, monetary growth in the US is dismal and decelerating.  In the past twelve months M2 has grown 1.6%, but has declined at a pace of -0.2% in the past six months (thru April).

–And while european news is bad, it is just as bad in individual US states:

From EconomicPolicyJournal “Connecticut is preparing to borrow $956 million to close a budget gap in the fiscal year beginning July 1, after borrowing money last year to cover a deficit of $947.6 million. Not good. Fitch has reduced the states credit rating from AA+ to AA.”

–Auctions this week: 3’s, 10’s and Bonds.

Posted on June 6, 2010 at 12:13 pm by alexmanzara · Permalink
In: Eurodollar Options

Leave a Reply