This Labor Day week started ominously with a weak PMI stat under 50 indicating contraction in the manufacturing sector for the first time in 35 months. A second round of weak stats came through at the end of the week with monthly non-farm payrolls showing up at 130,000 and under expectations.
Some positive influences were evident, too, with the labor participation rate increasing to 63.2% and wage gains beating estimates driving hope that the consumer will continue to spend and keep the economy chugging along.
Taking any one stat by itself would cause one to come up with narrow, and certainly, flawed conclusion about where the markets are going.
So, this battle of countervailing forces caused the equity markets to go… UP; and the bond market to go… DOWN. It seems that the markets liked these stats with positive leaning expectations; if nothing else, tilting the scale to encourage a Fed easing. But, we still have a global slowdown with trillions in negative yielding bonds causing a flight to US dollar-denominated debt as a driving force to push US rates low… which force will win the battle? Not to mention the continuing repercussions of the US-China trade issues… And, so it goes…