Friday, January 05, 2007

Not exactly what I was expecting…

Well the employment number came out to day and showed considerably more strength than the market was expecting.

Bloomberg Survey 100k
Actual 167k

This after revision from the previous month from 132k to 154k. Anyway you look at these numbers they are strong. Initially U.S. futures reacted exactly as you would have expected selling off 12-13 ticks but as I write this we are now only down 7 ticks. It seems that for today at least we are trading off stocks (down 88). Stocks for the past few weeks (months??) have been grinding higher on the expectation that the Fed was ready to ease. These numbers clearly put that thought process on the back burner. I re-entered my EM trades, selling Usd/Brl and Mexico while also getting short the forwards. No great size but with a clear bias that way.

I do feel abit lost at the moment.



Blogger John Russell said...

Now this is interesting. I had the exact opposite view of what was going to happen! I thought the action that took place in Nov and early Dec was off the wall. It seemed, just not right. I am not sure how else to explain it. It seemed like a game, like overspeculation was taking place. I have been looking at the numbers for the past month and I thought it did not make any sense the size of the moves, especially on the pound/dollar with the news that came out. That is technically speaking. Fundamentally speaking, I thought that the few reports that came out really didnt signal any particular impending doom for the USD. It seems like the housing market is stablizing, although I do think there is probably more back end damage that will come through on reports to come, interest rates are reasonably stable, not seeming as if they will shock the economy in any way, they are still in generally neutral territory. Jobs have been good, they are staying within an average gain of 100k a month, which is super!

So I am not all optimist, I think right now we are walking the tightrope, but its not a time to really call it either way. Alot of people are predicting recession, so if you are a USD buyer, youll find alot of liquidity.

I think the numbers yesterday were not necessisarily a sign in the sky that the USD was going to blow everyone away, but at least a sign that things are stable for now.

3:54 PM  

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