Will jobs report instill confidence?
June 8, 2020
–Friday’s blockbuster employment number of +2.5 million NFP sent yields soaring and steepened the curve to new recent highs. Tens jumped 9 bps to 90.5. 2/10 ended at 69 bps, up nearly 7. Red/gold euro$ pack spread settled 62, up 7.5. This data release will almost surely be subject to large revisions, but stocks also surged on the news. I’ll believe the happy narrative when I see NFIB small business optimism (released tomorrow) rebound from its recent plunge. On the attached chart, I compare NFIB with the Russell index. Fairly strong correlation. The latter has exploded higher while the former is now below the depressed level before Trump took office. In the Q4 2018 stock pullback, the NFIB confidence drop was pronounced, and it never came close to the high set earlier in the year, even as RTY came back to test the 2018 high. Relating to business optimism or lack thereof, new bankruptcy filings are now at the highest level since the GFC.
–Three year auction today.
