news01-08-07 - Treasury and Eurodollar Futures Tumble,...

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Unformatted text preview: Treasury and Eurodollar Futures Tumble, Dollar Paces FRIDAY, 05 JANUARY 2007 23:24:50 GMT Printer Friendly | Email Article | RSS | Previous articles Written by David Rodriguez and John Kicklighter, Currency Analysts Change in Nonfarm Payrolls (DEC) (13:30 GMT; 08:30 EDT) Actual: 167k Expected: 100k Previous: 154k (Revised from 132k) How Did The Markets React? Today’s surprisingly strong Non-Farm Payrolls report sent shocks across major US asset classes, with the dollar sharply higher while both bonds and equities saw sizeable declines. Given expectations of a much-weaker print than previously forecast, markets were clearly prepared for the worst. This is most clearly visible in progressively higher bond prices, with Treasury Note yields hitting two- week lows prior to the New York open. A strong NFP report clearly assuaged fears of a broader economic slowdown, however, with financial markets posting immediate responses. Looking at the specifics of the labor data, there was ample reason to feel better about the state of the US consumer. Companies added the most jobs in four months, while annual wage growth hit its highest since November of 2000. US Federal Reserve speakers were seemingly vindicated by pay hikes at 4.2 percent, clearly leaving risks to the topside for inflation. If such a trend is to continue, it would effectively rule out interest rate cuts for much longer than previously expected. Subsequent dollar strength was almost inevitable, with the Greenback launching to 2-month highs against the Euro. expected....
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This note was uploaded on 04/18/2008 for the course FINANCE 4604 taught by Professor Pavlova during the Spring '07 term at FIU.

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news01-08-07 - Treasury and Eurodollar Futures Tumble,...

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