Sense on Cents

On the heels of the G-20 and the April Unemployment Report, there are some interesting crosscurrents playing out in the market. The price action strikes me as inconsistent. Given some of these inconsistencies, I believe the price action actually reflects the squaring of positions of many short term traders who are being tested.

Equities: despite an Unemployment Report that is in line with expectations, this report was weaker than expectations. That weakness is reflected in the revisions to January’s report and the decline in the hourly workweek. Despite the ongoing economic weakness, stocks are slightly higher on the day and are closing out the 4th strong week in a row.

Bonds: typically economic weakness would indicate a decline in interest rates and a move higher in bonds. Market activity is reflecting the exact opposite. 10 year U.S. government bonds are significantly lower in price with the rate on these bonds back up to 2.90%, which is higher by 12 basis points on the day. (more…)