stocks

Wild Ride Before and After Jobs Report Due to SVB

The most notable development on jobs day has stunningly turned out to be the trading that came before the jobs report in the overnight session.  Bonds embarked on a fairly big rally, ostensibly due to Silicon Valley Bank news.  10yr yields were roughly 10 bps lower before NFP came in at 311k vs 205k f’cast.  Anyone could be forgiven for think such a number meant trouble for bonds, but bonds paradoxically rallied (with an eye on higher unemployment and lower wages). After a brief correction, the gains continued all morning, ultimately adding up to the biggest rally day since November 10th. But how much–if any–of this is due to the jobs report?  That’s a tough call, but only inasmuch as deciding if we want to give the jobs report ANY credit.  It may deserve anywhere between 5-20%, but the market is clearly trading the SVB news.  One of the clearest indications of that comes from the stock market. The prevailing trend in stocks and bonds has been for both sides of the market to rally and sell together based on shifts in Fed rate hike expectations.  This makes for the classic mirror image trading pattern we sometimes refer to as the “Fed accommodation trade.”  Over the past 2 days, however, as the SVB news intensified, markets shifted back to the old school “risk-on/risk-off” trade. That doesn’t mean this move isn’t “real.”  To be sure, Fed Funds Futures are reacting as well.  That said, inflation is still the big picture driver of rate momentum.  SVB news only matters in the big picture if it kicks off a mini-wave of bank failures that somehow manage to impact inflation or otherwise serve as a canary in a coal mine for a harder economic landing.  Markets may be braced for that possibility today, but they’ll forget all about it if next week’s CPI comes in hot.  Conversely, if CPI comes in cooler, it could add to the momentum.  Bottom line: we’re still data dependent, but now with a nice little boost to prevailing levels.

What Is the Average Stock Market Return?

Wondering how much you’ll gain by investing in stocks? It helps to look at the average stock market return for the last 10, 20, and 30 years.

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New Normal For Labor Market Data

After a ho-hum and mostly sideways overnight session, bonds are starting the day with a surprisingly swift reaction to the Jobless Claims data.  While this report may seem similar to the big monthly jobs report (after all, both generate an unemployment rate), they have never been in the same league when it comes to market movement potential.  To be sure, that is still the case, but the difference now is that markets are clearly expressing at least some interest in the weekly Claims data in terms of volume and volatility–something we’ve only seen a handful of times, ever. We can further confirm the nature of the market’s reaction by considering stocks as well.  In fact, both before and after the Claims data, stocks and bonds traded in their “Fed Friend or Foe” pattern.  This happens when data suggests a friendlier Fed and both sides of the market rally or when data suggests a more hawkish Fed and both sides of the market sell-off.  In other words, the equally noticeable rally in stocks at exactly the same time as bonds suggests the market is definitely trading Jobless Claims for its impact on Fed policy. Here’s the biggest takeaway: if this data was worth this much of a reaction, then the potential impact of tomorrow’s jobs report is more massive than normal.

Calculating an Investment’s Payback Period

What Is a Payback Period? The payback period is the amount of time it will take to recoup the initial cost of an investment, or to reach its break-even point. Considering the ups and down of various market factors — e.g. the crypto winter or the impact of higher-than-usual interest rates — being able to […]

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10 ETFs With the Highest Exposure to Silicon Valley Bank

Want to find out whether your portfolio is exposed to Silicon Valley Bank? Start your search here.

Mortgage rates surpass 6 percent for the first time since 2008 – The Washington Post

Mortgage rates surpass 6 percent for the first time since 2008  The Washington Post