Pro Perspectives 12/2/21

December 2, 2021

We get the November jobs report tomorrow. 
This is even more important than usual, because the Fed told us in early November that the condition for liftoff in interest rates would be "maximum employment."
Remember, just days after Powell made these comments (on November 3rd), we had a booming October jobs report, with an unemployment rate that dropped to 4.6%, on 5% wage growth.  And then another effective oral Covid treatment option was introduced.  And then Biden's vaccine mandate for businesses was blocked by a federal court.  And then the House passed the $1.2 trillion infrastructure bill.  And then the foreign travel ban was lifted.
This is a cocktail for creating and filling jobs.  With that, it's a good bet that the employment situation in November was hot.  
And if that's the case, not only are we looking at a faster taper (as Powell telegraphed this week), but validation for a much sooner interest rate liftoff
With that said, the interest rate market has already been pricing in a more and more aggressive timeline on rate hikes.  Now the market is pricing about a 30% chance of a March hike. 
If we get a hot number tomorrow, the expectations for a March will jump. 
What should also jump is the 10-year yield.  This has been diverging from the trajectory of Fed policy and inflation, in recent days.  

This scenario, where the 10-year yield begins to reflect an impending inflation-fighting Fed, would embolden the sellers in the very high multiple stocks (high growth tech).  The Nasdaq may have quite a bit more pain to come. 
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