Because what really matters is not spending or incomes for the average American (which both missed dismally), the market appears convinced that the 2nd lowest jobless claims print in history is what matters and the "rate hike is coming" trade is on. Bond yields are higher, dollar is jumping, and gold (and silver) and dumping...
Gold dumped as dollar jumps...
[4]
And Silver spanked...
[5]
and stocks and bonds dumping...
[6]
It seems any job is a good job... even if it is to the detriment of incomes (because hey the government can always help out with that)
* * *
As Scotiabank's Guy Haselmann explains, it's about the wage growth...
It wasn't so long ago that Yellen and crew were talking about needing to see wage growth. Well, the ECI wages and salaries increased from 2.3% to 2.6% in Q1 from year ago and 2.8% y/y in terms of private sector wages and compensation. Also claims at lowest level since 4/14/2000 when Funds were 6%.
This is happening when Bunds are under strong pressure – something that has kept Treasury yield down.
Treasury technical charts might be beginning to break down and are something to watch. Most importantly, all this is occurring one week before a payroll report (a 5 week period) – where the market will be afraid of a strong number.....makes it so Treasuries will have a difficult time gaining any traction.
Bottom line: Risk/reward in the near term remains to the downside for Treasuries. Month end may add a bit of volatility but is not nearly a powerful enough force to drive or keep the Treasury market up. Fed fund future odds of a June Hike at 5% are much too low.
Charts: Bloomberg
