Today’s NFP data was exactly what we needed to let us know what has been going on so far in 2016. It was so strong that it left no doubt as to how neutrally positioned markets would have traded it. For you smart kids in the crowd who’d like to point out that wage growth missed its forecast, I’m sure we can all agree that there’s never been a wage growth miss of 0.2 percent that’s overshadowed a 92k payroll beat.
Bottom line, neutral markets would have sold bonds and bought stocks on today’s report. The fact that they didn’t tells us that they’re not neutrally positioned (shocker!). We can probably conclude that this sense of global economic panic is the driving force right now, but can’t completely rule out that it’s been exacerbated by the traditional ‘old-year/new-year’ tradeflow repositioning. As such, next week could be a bumpy ride, even if the global panic story ultimately ends up pushing rates lower still.