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US
JOBS DATA LESS BAD THAN MEETS THE EYE WE SUGGEST: Bond bull intact, but short-term surge an over-reaction SUMMARY: Ironing out monthly volatility (on the downside this time) US jobs data remain consistent with 1% GDP growth – well below the over 4% average in Q2-Q3. The market’s obsession with the backward-looking jobs data continues to cause overreaction to the headline figure. Last month it was on the high side – bonds went down, a good buying opportunity. This month it is on the low side – bonds went up: not necessarily a selling opportunity, except for short-term traders, because the US “landing” is hardening and the bulls have the better of the argument for the next few months.
In previous months, our Daily Notes on these numbers have pointed out that the 0.7-0.9% recent rates of gain – measured as the latest three months versus the previous three, at an annual rate – are consistent with about 1% GDP growth. So these numbers are weak by comparison with actual GDP growth approaching 4% in Q2 and 5% in Q3. With December car sales modestly up and November’s business construction still mysteriously booming, a recession quarter in Q4 looks unlikely. The bears will have to await 2008 data for their next helping on honey.
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