The music starts up. Drum roll. And the jobs report shows just enough growth but not too much. "This report was darn close to the Goldilocks scenario. However, the revisions are somewhat of a concern," said Russell Price, senior economist at Ameriprise Financial Services
This game of musical chairs appears to have been repeated ad naseum for quite some time. Each time we see a similar reaction in interest rate sensitive instruments.
- The 10 year bond had seen the yield creeping up to 2.24% just 2 days ago. This morning it is dropping to 2.12% and now looks like it may want to return to the bottom of this ongoing trading range.
- Financials had been in rally mode in anticipation of higher net interest margins. Surprisingly they seem to have remained in favor this morning though we'll have to see if that lasts.
- High yield equities had sold off hard in the past few weeks. Those high yield stocks that have a growing underlying business are doing well today as their growing distributable cash flow looks even better in a lower rate environment.
Stay tuned. The music will start up again in a few weeks.