Discover more from Capital Flows
Brainstorms: End of Week Thoughts
Interesting Set Up With Rates
There are two major things I am thinking about as we head into the weekend:
First, the NFP number came out way above expectations causing bonds to sell off:
Here is the deal with the NFP numbers. I know there are some good arguments for why they have issues or aren’t reflecting the labor market correctly. However, if the entire bond market is going to sell off on “wrong numbers,” then it’s clear that any view about the numbers being “wrong” has yet to impact flows. Remember, the market is about flows!
Second, there is a very interesting development occurring with the forward curve as we end the week. The June meeting is pricing a lower probability of a hike than the July meeting.
This spread between the June and July meetings will be critical to monitor for any bond execution in the coming two weeks.
Thanks for reading!