Fairly Strong Employment Report Moves Markets Lower

The employment report this morning was a reasonably good report–meeting expectations, and while it was not the blow out number that we feared it was good enough to stimulate more selling in equities.

It is interesting to not today that the yield curve is flattening–short rates moving higher and the 10 year-30 year moving lower. This is consistent with what we believed should happen with a tepid economy and a potentially higher Fed Funds rate and has been going on for quite some time now. We are ok with this movement for now unless the flattening gets too severe in which case we can look for a global recession–or worse.  We certainly will have an interesting year ahead as the FED tries to navigate higher rates with global threats of deflation.

At this moment it looks like maybe markets will ‘quiet down’ next week–but on the other hand who really knows. We believe the stock and bond markets are really dangerous with the unknowns in the global economic scenario.