Wednesday, January 03, 2007
Well, that was a serendipitous fill in cable, as it's gotten whacked by model selling (and buying of EUR/GBP) thereafter.
However, the ADP report registered a negative (-40) for the first time since 2003, raising the spectre of a weak payroll report. Indeed, at least two investment banks (Goldman and Morgan Stanley) slashed their payroll forecasts five minutes after the ADP release. At this juncture, however, it is probably too early to say that the recent skein of solid US data has come to an end.
The ADP has, after all, overestimated payrolls the last couple of months. Could this be payback? Moreover, December is especially tricky for seasonal adjustments.
It wouldn't take much more than an ISM of 53 to wipe away any pesseimism resulting from the ADP, and the Chicago number last month certainly raises the risk of such an outcome.
Indeed, bonds and the dollar have already retraced some of the ADP-related selloff.
Overall, it has been a solid start to the month/year, and it is nice to already have booked some profit, particularly at such a tasty level. Macro Man is still waiting for a good entry point for a beta-plus strategy, which will be revealed in the days to come. Stay tuned...