Bonds And Gold Are Getting Wrecked

A better-than-expected result from the October jobs report out at 8:30 AM has markets moving around a lot this morning.

Initially, stocks, bonds, and gold all tanked on the news.

However, stocks have come all the way back and then some, while bonds and gold continue to drift lower and lower.

The idea in the market is that this jobs report makes it more likely that the Federal Reserve will begin to wind down its quantitative easing program sooner than the FOMC’s March meeting — perhaps in December or January.

While markets seem to be pricing in this sort of shift in the timeline for tapering bond purchases, economists we’ve heard from so far are largely sticking to their calls.

“Although we maintain our view that the Fed will taper its purchases beginning next March, with a three-month average pace of payroll growth now at 202k, we see the October data as modestly increasing the likelihood that it begins to taper its asset purchases in December,” says Barclays economist Michael Gapen.

“We’ll stick with a January taper, thank you,” says UBS economist Drew Matus.

The charts below show what markets are doing right now.

On top from left to right are S&P 500 futures, the dollar-yen exchange rate, and the euro-dollar exchange rate. On the bottom, gold futures, 10-year U.S. Treasury futures, and WTI crude oil futures.

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