The post non-farm payrolls trade has been dizzying

This is some tough price action to make sense of, let alone make money with.

It’s been back-and-forth nonstop today since non-farm payrolls. The dollar rallied initially, which is what you would expect on falling unemployment. But it quickly gave it all back, then rallied again. Wash, rinse, repeat.

Flows have been a big part of market dynamics and the market has been aggressive in pricing in Fed cuts without a lot of data to back that up. Layer on that is the blowup of the extremely-crowded yen trade.

Now we’re getting some retracement in bonds but stocks are holding up and the dollar isn’t sure which way to go. There’s a school of thought that inflation can (and will) come back to the Fed’s target even with a hot economy, something that would defy economic history but could be a pandemic-era one-off.