What payroll number?

It's three and a bit hours into the London morning, and the question that keeps popping up is "what payroll number?" USD/JPY has rallied a percent, retracing all of its post-payroll losses, US fixed income has come straight back to where it was before the number, and equity markets have fared very nicely, indeed, thank you very much.

Now, while it's true that one number does not a trend make, the Asian market's willingness to ignore the US session is peculiar. Of course, the US session itself was rather peculiar; what odds would you have gotten on St. Patrick's Day (the first trading day after Bear went into permanent hibernation) that US equity volume (as proxied by the S&P 500) on the April payroll day would be the lowest of the year? And yet it was.
This suggests that the recent 110 point rally had more to do with bear fatigue than genuine bullish risk deployment. Macro Man's positioning indicator suggests that there remains a healthy short base in US equities, albeit a smaller one than existed a couple of months ago. So perhaps the grind higher will continue for a bit longer....at least until retail earnings start rolling in later this week.

Elsewhere, the benefits of a diversified portfolio continue to elude global investors. Consider the chart below (which may require a click-on to magnify), which shows three apparently unrelated financial prices: UBS stock, the US 2 year note yield, and USD/JPY. The correlation is pretty high, to say the least, which is why the "bad months" for investors, traders, and funds seem to be so brutal these days.

Finally, Macro Man is pleased to report that he remains in fine physical fettle; however, if he ever decides to take a day or two off during the wek, now you know why.....
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