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Wall Street Webcasting Presents: Wells Fargo Securities: “Risk Markets Still Strong Despite the “Warning” from Treasury Yields.”

May 7, 2014

NEW YORK--(BUSINESS WIRE)-- Wall Street Webcasting has prepared and provided for you an exclusive broadcast of Wells Fargo Securities own, Rich Gordon. Gordon is highly recognized for his weekly narrates regarding the fixed income strategy at Wells Fargo Securities (NYSE: WFC). This week, Gordon discusses the recent direction of treasury yields and the implication that it has on certain risk markets.

The Non-Farm Payrolls report is perhaps the most closely watched monthly economic release. According to Wells Fargo analysts, it is what moves the financial market the most. Not only is it what moves the market the most; it is also commonly directionally consistent with these moves. However, Friday’s Non-Farm Payrolls report showed a healthy 288,000 jobs gained in the month of April. Yields ended the day lower, instead of bonds trading off, after moving in a volatile 13 basis point intra-day range. Wells Fargo analysts do not believe that the prices of risk assets are coherent with the current level of treasury yields.

So why the disconnect? Wells Fargo analysts believe that investors are uneasy about the crucial structural problems in the U.S.’s labor markets. For example, there was a substantial downturn in the labor participation rate from 67.3% to 62.8% that resulted in a drop in the unemployment rate from 6.7% to 6.3%. This continues to outline the fundamental mismatch in the number of people who want to work and the number of jobs that are accessible to them that fit their dexterity. Investors are concerned that there will be difficulty in reaching significant GDP growth with structural problems such as this that are counterproductive to that growth.

Emerging markets growth, especially from China, has been disappointing, with manufacturing PMI’s remaining at 50. If this were to fall below 50, it would be a red flag hinting at slow growth. Also, the situation in the Ukraine is headed down an unstable path. The 10-Year Treasury Yield was pushed to its first key price resistance level at 2.57% on Friday, which is the lower end of a tight range that has been in place since January.

To hear more about investors’ concerns regarding the structural problems in the economy and the ramifications of these concerns, please tune into Wells Fargo Securities’ latest video.

Please visit the following link to view the video:

Wall Street Webcasting

Heather Capizzi, 201-683-2100

Source: Wall Street Webcasting

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Source: Business Wire

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