John Ryding Market Quotations

The solid trend in payroll growth has been maintained into February. Reduced labor market slack, illustrated by the decline in the unemployment rate since June 2003, appears to be putting upward pressure on wage increases.

This means people will be able to go out and refinance their house where they may not have been able to do before and I think that we have to remember this isn't over. I suspect the Fed will cut rates again in November and that will continue to keep a lid on borrowing costs and hopefully will compensate for some of the lack of credit flows to corporations that problems in the bond market have caused.

The bond market had a pretty good move upwards yesterday, but I don't think we're going to get back to that kind of mania to buy Treasuries that we had in the month of September.

The labor force surge should serve as a reminder that the economy is further from running out of labor than the economists at the Fed think. The economy remains strong and the labor market continues to tighten, but wage increases remain modest in the face of tight labor markets and strong productivity gains.

The level of the stock market is always an issue for the Fed but I don't think it's such an issue that it's going to influence Fed policy.