The market was a tornado this week as payrolls and the Fed confused investors. 🌪️
Friday’s stocks and treasury yields reflected investors’ confusion over mixed job numbers/payrolls. December’s unemployment rate fell to 3.9%, but only 199,000 jobs were added last month — that’s about 200,000 fewer non-farm payrolls than analysts expected. December’s added jobs also showed a serious decline from the average 537,000 jobs added per month throughout 2021. Mixed payrolls data caused the U.S. benchmark 10-year Treasury yield to reach 1.801%, a 2-year high.
By the end of 2021, the U.S. created 6.4 million more jobs than EOY 2020. 👍 That’s definitely progress, but still 3.6 million fewer jobs than before the pandemic. The labor market continues to be tight thanks to continuing supply shortages, high quit rates, and rampant Omicron infections.
Although stocks traded higher on Monday and Tuesday, the Fed’s meeting minutes on Wednesday threw everyone for a loop. 🤦♀️ The minutes implied an earlier rate hike than what was originally expected due to ‘tightening financial conditions’ (a likely reaction to inflation.) The minutes also mentioned a significant balance sheet reduction.
Since Wednesday’s news, major indexes have traded lower with consumer discretionary and technology stocks losing big. 📉 Bonds yields have gotten a boost. The dollar index fell 0.53%, its biggest loss in 6 weeks.
Gold gained on the news, Bitcoin lost 5%, and crude stumbled 0.52%.