Block Inc (XYZ), the Labor Market, Benchmark 10-Year Treasury YIELD, and the Fed...

What Am I Thinking?  Block Inc-- Symbol XYZ -- The Labor Market, Benchmark 10-Year Treasury YIELD, and the Fed...

Block Inc's CEO Jack Dorsey tells the WSJ this AM, "Intelligence tools have changed what it means to build and run a company." In a letter to shareholders, Dorsey "alluded to artificial intelligence tools as the reason for the cuts in a letter to shareholders." 

Apart from the fact that Block Inc's stock (XYZ) spiked more than 20% from 9-month lows near 48 to as high as 69.52 in a matter of minutes in reaction to the cost-cutting news, the ramifications to the corporate labor market could be-- likely will be-- profound. 

Other companies have executed layoffs in recent months, but THIS ANNOUNCEMENT in particular-- laying off 40% in one big cut because human labor for these jobs is either redundant or obsolete, probably is the tip of the iceberg.

Despite the anticipated enhancements to productivity, efficiency, and profitability, 10 year Treasury YIELD dropped like a rock from yesterday's close at 4.02% to this AM's open at 3.98%. 

And even after a hotter-than-expected January PPI report today, YIELD refused to bounce (!), which tells me that it is preoccupied with the implications of the Jack Dorsey Block Inc announcement, i.e., rapid shrinkage of the labor market, with considerably more people applying for Unemployment Insurance in the upcoming weeks and months...

My attached very Big Picture Monthly Chart of 10-year YIELD-- posted on the final trading day of February-- shows a big red down candle for February from 4.32% to today's low at 3.97% (so far), against a backdrop of expanding GDP, forthcoming tax refunds, improved productivity, and still stubborn (tariff?) inflation!  February's big red negative candle is bearing down on the next key support plateau at 3.95%, which, if violated and sustained, will break the 2020-2026 up trendline, and will point YIELD to 3.50%-3.60%... 

It seems to me that Treasury YIELD is becoming increasingly concerned that the labor market is on the verge of causing problems for a Federal Reserve that either has failed to anticipate the snowball effect of AI, or has been too slow to react to it. In any case, the bond market may consider Fed policy to be way behind the rate-cutting curve much sooner than later. 

And that will NOT be positive for the stock markets UNLESS investors believe the Fed will cut rates sooner than later... 

At the moment, the markets assign a 5% probability to a rate cut at the March 18th FOMC policy decision.

Connecting the dots, it appears to me that benchmark YIELD is under pressure in anticipation of a depressed labor market that is reeling from the impact of AI, which is creating a deflationary effect that the Fed will fail to address preemptively... MJP