Show Me the Money

Show me the money. The December jobs report showed average hourly wages increased 0.6% month-over-month and 4.7% year-over-year besting estimates of 0.4% and 4.2%, respectively. While the headline jobs number missed by a wide margin, the market’s fixation on inflation metrics helped push rates higher for the fifth consecutive session- rates climbing 2-4 bps across the curve.

First trading week of the year ends in a bang. You would be hard pressed to find a more volatile start to the year in interest rate markets. The 10-year Treasury yield has climbed over 26 basis points to end the week at 1.76%- the first time the benchmark has  moved by more than 25 basis points to start the year since 2009. The volatility hasn’t been isolated to the long end, and has extended across a range of maturities, 5-year and 2-year rates having climbed by 0.23% and 0.13% respectively.

Week ahead. The economic data calendar will not slow down as we enter the second trading week of the year. The latest consumer price index data (arguably the closest watch measure of inflation) will be released, forecasts call for a spicy 7% headline inflation figure, and a 4.9% “core” inflation number (excludes food and energy). Closing out the week will be purchaser price data, another important part of the inflation equation. No surprise, that measure is also expected to show an increase in prices- the headline figure forecasted to hit 9.8%.