September Jobs Data Backs An October Hold: I See A Problem (SP500)

• A soft September jobs report that locks in an October Fed hold could actually be bearish for stocks. • Without a hot CPI print, bond vigilantes may push long-end yields higher, pulling money from equities into bonds. • Author holds high cash and is weighing (but hasn't bought) TLT puts. A soft September employment report that supports an October rate hold may sound bullish, but I think it's actually bearish for equities. Markets need a rate hike more than ever because of bond vigilantes: if inflation isn't tackled aggressively, long-end Treasury yields could keep climbing, pushing portfolio managers out of stocks and into bonds. I'm hoping September CPI comes in hotter than expected — otherwise the Fed risks waiting too long to act. For now I'm sitting on an unusually large cash position, and I'm tempted to buy TLT puts, though I haven't opened that position yet.