Today's jobs report should put to rest any idea the Fed will quicken the pace of the QE taper, writes Jon Hilsenrath, but it's unlikely to halt the course of gradual reductions either. Fed officials have sounded pretty chipper about the economy lately, he says, but the report is a reminder they shouldn't get ahead of themselves (as they've done throughout the recovery).
Then there's the unemployment rate: The declining labor force could have headline UE hitting 6.5% - the supposed threshold for when the FOMC might consider abandoning ZIRP - as soon as next month. Officials have said ZIRP would remain "well past" the 6.5% level, but what does "well past" mean? A year? Two years? A few months?
Treasury prices are at session highs and the 10-year yield is all the way down to 2.89%. The December 2015 Eurodollar future is higher by 9 points, now pricing in a little less than 100 basis points of tightening between now and then.
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