UBS: The Eurodollar rates strip is off 9 to 10 ticks on the day. The June long bond is off 1-1/4 on the day. The equity market (futures) takes it reasonably in its stride. A good number for growth and equities, but the severity of the bond move just a little unsettling. The vol trade is the one for equity to be fearful of here. Markets should now be fully pricing the removal of “patient” in a couple of weeks and a Fed statement that focuses on data rather than time.
DEUTSCHE BANK: Another good print for TIPS. Strong unemployment data, weak earnings still, FED on hold and happy to wait. Maybe some impact on the data from the weather but we wont find out for some time. Whether TIPS trade well on this or not is another question but this looks positive for the asset class.
MORGAN STANLEY: Overall strong NFP report. 295k vs 235 expected. Unemployment rate drops to 5.5% vs 5.6% expected with labor force participation declining. Underemployment rate falls to 11% However average hourly earnings came in soft which tempers some enthusiasm, +0.1% vs 0.2% exp. Despite the soft wage report, the bottom line is that the US is quickly moving closer to full employment and the Fed is still in play as soon as June. We stay long USD against EUR, CHF, TRY and ILS.
CITIBANK: Our strategist thinks that this was a very good headline nr – hence the initial kneejerk reaction. However, the things that Yellen and the FED really look at are not as positive – no real wage growth and low participation rate. As so many people out there want to be long USD, however, these caveats might not make an immediate impact.
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