Abstract
Several researchers have recently shown an interaction between macroeconomic variables and stock returns. Most of these studies have concentrated on interest rates and inflation. These and other variables, of course, have an influence on the debt markets as well. Other variables that can influence the debt and equity markets include employment information. On the first Friday of each month the government releases its employment report for the previous month. Strong growth in employment generally bodes well for economic output and growth in the economy. Any inflation and interest rate implications of a strong employment report will ultimately be reflected in bond and stock prices. It is generally observed that if payroll employment growth is moderately strong prices in the bond market drop while prices in the stock market rise. The empirical evidence presented supports these observations. This study documents the reaction of the bond and the stock markets in response to the employment reports. As the unemployment rate tends to rise so do the bond and the stock markets.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have