Policymakers Are Stuck in a Trap of Their Creation
They have been kicking the can down the road for a very long time, careening from one crisis to another always trying to make things look a lot better than they were.
Last week was a strange week in the markets. The jobs data that was released on Friday for the month of May presented a message of two inherently contradictory stories. The household survey showed a shocking drop of 408,000 jobs, while the BLS nonfarm payroll report showed a stunning 272,000 new jobs, far more than expected. Either the job market is much stronger than expected – or much weaker – but both can’t be true. The Fed and the investment community chose to embrace the nonfarm payroll numbers, so treasuries got slammed, with yields climbing by nearly 3½ percent across most maturities.