Friday’s miss on payrolls was not the worst of it. The nasty lower revisions for the headline job print in June and July (-74k) were not pretty. Initial reaction saw a deflated dollar, while emerging market currencies loved it – dollar BRL and MXN rallied +1%.
In truth, this August payroll report is one of the outliers among recent data reports showing a clear strengthening of activity in the US. However, the details are worrying enough to make the Fed doves more cautious on how tapering will proceed. Analysts not that even if the staunchest of doves, Chicago Fed Evans, stating that he can “be persuaded” about tapering beginning then odd favor tapering happening later this month.
The key to all of this will be the “size.” A poll of Fixed Income dealers found expectations centered on a $15B reduction in liquidity per-month. What would probably be more realistic would be a number closer to $5-10B. A token sum and an amount that would help the US Treasury market to simmer down and get rid of some of that excess noise. Although not a true Fed consideration, a nominal amount that would bring some much needed relief to the Emerging Markets.
- Chicago Fed Evans Says Tapering Could Start This Year
- Fed’s Rate Hike Now Expected Later in 2014
- Treasury 10-Year Yield Advances to 3%
- Fed Taper May Occur on Further Good Jobs Data
- Fed Tapering Main Topic Around G20 Meeting in Russia
- US Factory Orders Drop in July
- US Private Payrolls and Service Sector Could Signal Start of Fed Taper
- US Private Payrolls Add 176,000 New Jobs
- Fed’s Kocherlakota believes in Continued Stimulus
- Fed Officials Assess Trimming QE3
- US Car Sales jump to near Six Year high
- Obama Gains Senate F/R Committee Approval For “Limited” Military Operation
- US Trade Deficit Widens in July
- Bank of Canada Maintains Rate at 1 Percent
- U.S. Dollar Index near Six Week High
- Summers as Head of the Fed Could Spell Risk for Emerging Markets
- US Manufacturing Index Continues Upward Trend in August
- US Payrolls Disappoint While Jobless Falls 7.3%
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