Lots of data, little reaction
* The economy created 152,000 jobs in January, according to ADP Employer Services. This report pre-dates the "official" Bureau of Labor Statistics report, due out Friday. ADP has a checkered history -- last month, it forecast a drop in jobs of 40,000 and the official figures showed a gain of 150,000. We'll see if ADP does better this time. It's January forecast is roughly in line with the consensus forecast of economists polled by Bloomberg -- 150,000.
* The employment cost index gained 0.8% in the fourth quarter, down from 1% in Q3 and below forecasts for a similar 1% gain this time around. Interestingly, total compensation was actually the strongest in construction (up 1.1%), retail trade (up 1.1%), education (up 1.4%) and leisure (1.4%). That last two make sense to me. The first two, not so much.
* Q4 Gross Domestic Product rose 3.4% year-over-year. Personal consumption was strong, up 3.7%, thanks to a big jump in durable goods consumption. Private investment was weak -- down 1% YOY -- thanks to a gigantic 12.6% plunge in residential fixed investment (think housing collapse here). Government spending was up fairly significantly as well, 2.8% YOY, thanks to a big pop in national defense spending and state and local spending. Could the state/local surge be due to the lagged effect of surging home prices ... which have resulted in a tax windfall for towns, counties, and states? That'd be my bet.
* So what about the price/inflation indices? Let's look at the annual rate figures there. The core personal consumption expenditures price index rose at a 2.1% rate. While that key measure watched by the Fed is down from 2.2% in Q3, it's still higher than the 1% to 2% range the Fed would like to see.
In early bond market action, traders aren't doing much. 10-year Treasury yields are up about 2.5 basis points, while long bond futures are down 6/32. Looking at the longer-term picture, however, the bond bulls are on the ropes. With yields still below the federal funds rate across the board ... the data continuing to bury the idea of a Fed rate cut ... and bond futures holding below key technical resistance, the door is open to further price declines and rate rises.