So, what happens from here? The financial markets are trading all over the lot as investors remain confused in regards to interest rates, stock futures, commodity prices, and the dollar. Last week’s volatile behavior was influenced mostly by mixed reports on the economy, a jump in the value of the dollar, and uncertainty about future Fed policy. The fall in the dollar ($1.12 Euro) was unexpected and sent the price of oil back above $30 per barrel to close the week at $31 per barrel. The Dow was down over 1.3% for the week, the S&P lost 2.8%, and the yield on the 10 year UST note bounced up and down as each event transpired. The three economic releases of particular importance was a plunge in factory orders (-2.9% in December), a drop in industrial production (-1.8% in December), and the January employment report. The U.S. economy created just 151,000 jobs in January and the unemployment rate dropped from 5% to 4.9%. The financial market’s response to the jobs report at first glance was “happy” and then, after scrutiny, “not so happy.” The good news was a modest increase in wage growth and a slight upward move in the labor participation rate to 62.7%. However, economies in Europe, China, and Japan continue to squeeze exports of U.S. goods and low interest rates off-shore are keeping a lid on our long bond rates. Fed officials are still indicating a desire to raise the over-night funds rate as many as 2 or 3 times this year but bond traders are thinking otherwise. (The most likely scenario is a June hike and maybe again in December.) Chair Yellen’s Humphrey-Hawkins testimony this upcoming week will hopefully clarify some of the market concerns. The yield curve is suggesting a sideline strategy as yields out to 3 years remain rich to the cost of funds. Clueless as to what happens next!