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Steno Signals #85 – NFP report full of FAKE news?

An extraordinary NFP report spooked markets on Friday, but is the report full of fake news? The NFP admittedly rhymes with the big picture observations. The US economy is accelerating, while Europe is stuck in the abyss.
2024-02-04

Happy Sunday and welcome to our flagship editorial.

A week of bizarre front-end volatility has come to an end. From “higher for longer” to banking crisis 2.0 to inflation crisis 2.0 in a matter of five trading days. What’s up and down? It’s time to cut through the BS.

The non-farm report made for exceptionally hawkish reading on the surface and rates markets accordingly went bananas on Friday. Markets went from pricing a May cut with an implied 100% certainty to approaching a coin-toss decision.

Allow me to explain why that is 100% nonsensical given the details of the non-farm-payrolls report. Expect plenty of Captain Hindsight’esque ex-post conclusions, but for once there is actually strong value in such a granular analysis.

Chart 1: From banking crisis 2.0 to inflation crisis 2.0 in a matter of days


An extraordinary NFP report spooked markets on Friday, but is the report full of fake news? The NFP admittedly rhymes with the big picture observations. The US economy is accelerating, while Europe is stuck in the abyss.

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