The Department of Labor tracks and updates the monthly jobs report, and since the partial shutdown, we’ve kept current on this important economic update.
But the Census Bureau and the Bureau of Economic Analysis (BEA) weren’t funded and are quite behind on other critical updates. As they play catch up on updates, we wait in the dark.
The backlog includes:
- December new home sales.
- Personal consumption.
- The Fed’s preferred inflation index (PCE).
- Retail sales.
- And preliminary fourth quarter GDP.
The January Institute for Supply Management (ISM) Manufacturing Index was released on schedule Friday.
Remember, the December release of the important forward-looking and market-moving manufacturing report was quite disappointing.
The good news…
New orders rebounded by a sharp seven points after a drop of 11 points last month. Production rebounded by 6.5 points, while cost inflation flattened. Export orders slowed dramatically to the lowest in two years.
Overall, the January index surprised by showing strength and bounced 2.5 points higher than analysts’ expectations and December’s disappointment.
November’s U.S. factory orders were updated Monday.
October’s orders dropped 2.1% on the month and November orders were expected to rebound slightly. Instead, they fell another 0.6%. And, excluding the volatile transportation figures, dropped 1.3%. December’s figures are still delayed and aren’t scheduled to be released just yet.
The non-farm jobs gained in January rose by 304,000, nearly doubling what was expected. Yet the supposed gains in December were revised lower by 90,000.
The unemployment rate increased to 4%, which is higher than the 3.9% expected. More importantly, wages only grew by 0.1% on the month when a 0.3% gain was expected. Despite that, wages still maintained a 3.2% year over year gain.
Overall, the January employment report was strong.
The stock market had its best January in 32 years and the gains will most likely continue after the better than expected jobs report.
Treasury yields didn’t react much after the jobs report. Maybe that’s because of the large revision to December. Or maybe because wage growth was muted. The long-term Treasury yield fell back below 3% and has again flattened following the Fed meeting earlier in the week.
Look at the yield curve just after December’s meeting to last Thursday, following the January Fed meeting:
Notice how rates have dropped and more of the curve is completely flat? That tells us that the bond market isn’t as excited about the economy or the financial markets as the stock market is.
So, take this as a warnrning and proceed with caution!
Bond market volatility has dropped for now, but that will likely change in the near future. When volatility is in the normal to high range, my Treasury Profits Accelerator subscribers are more likely to see opportunities to profit!