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The surprisingly positive October jobs data that was released at 8:30 a.m. EST hurt the bond market, but it must have been especially painful for those who bought bond futures seconds ahead of the report. At 8:29 a.m. EST, five-year note futures soared to a nearly five-month high—before losing all those gains, and then some, to hit a three-week low. Ten-year note futures similarly moved much higher before dropping.
The move was so powerful that it led the CME, the exchange on which Treasury futures trade, to automatically pause trading. CME Group told CNBC.com that a "velocity logic event" was triggered, meaning that the market was automatically paused because of an extreme move. Not only was the five-year Treasury note paused, but the 30-year Treasury bond and the 30-year Ultra Treasury bond were paused as well. The 30-year was paused first, starting at 8:29:57 a.m. EST and ending at 8:30:02. The five-year note pause began at 8:30:01, and ended at 8:30:06.
The 204,000 jobs created in October, which was well above expectations, fostered perceptions that the Federal Reserve will reduce its $85 billion monthly bond-buying program earlier than it otherwise would have. As a result, bond prices dropped, and Treasury yields rose.
But at literally the last minute before the report was released, five-year note futures advanced to the highest intraday level since June 19.
Bill Fleckenstein says that investors who buy into the stock market at all-time highs are making a grave error. Comparing the current situation to the infamous bubbles of 1999 and 2007, the noted contrarian and short seller says that bulls are ignoring fundamentals at their own peril.
"People are, once again, being fooled," Fleckenstein said on Thursday's episode of "Futures Now." "In the stock mania in 1999, people were bullish because stocks were going up. In 2007, people were bullish because stocks and real estate were going up. They didn't look at—Why are they going up? Is this sustainable? Is this healthy?—and in both cases, it was not."
In this case, the bubble Fleckenstein points to is powered not by tech stocks or real estate, but by the Federal Reserve's quantitative easing program.
(Read more: What is the Fed talking about?)
"Now we have the Fed suppressing the bond market such that rates are ridiculously low, and capital is being misallocated everywhere, and the price of nearly everything is out of whack," Fleckenstein said.
But he says the Fed is starting to lose control already—meaning that stocks could crack even if the Fed continues to buy $85 billion worth of assets each month.
It may be rare for a fund manager to talk down the very asset class he's investing in. But bond fund manager Stewart Cowley is so bearish on bonds, he's actually taken a net short position that benefits when bonds drop.
"The bond bear market started in August 2012, and frankly, long-term interest rates should be about 1.5 percent higher than they are today," Cowley said on "Futures Now" on Tuesday. "And that means substantial capital losses coming in what is a rigged market in the United States."
When Cowley says the market is "rigged," he's referring the to outsized role played by the Federal Reserve. The Fed has been buying $45 billion worth of Treasurys and $40 billion worth of mortgage bonds every month. This has boosted Treasury prices, and suppressed yields.
(Read more: Bond prices fall as US services data surprise)
But Cowley, who is the head of fixed income at Old Mutual Global Investors, predicts that this quantitative easing program will soon come to a close.
"The process has reached an end now," Cowley said. "The reality is the America doesn't need quantitative easing anymore."
Famed energy trader Mark Fisher says that given crude oil's recent decline and the overwhelming bearishness in the oil market, he's just about ready to get long.
"I think it's worth trying to pick a bottom and test the long side," Fisher said on Tuesday's "Futures Now." "Everyone is just bearish. The whole universe is bearish ... but I'd wait a couple more days just to inflict a little more pain on the longs before taking a stab."
Since hitting at high above $112 per barrel on Aug. 28, oil has dropped some 17 percent. And on Tuesday, oil fell for the sixth straight day to settle at $93.37—the lowest close since early June.
With the market getting hit this hard, Mark Fisher, the founder and CEO of MBF Clearing, spies an opportunity.
"I'm under the belief that you should be a buyer below $95 and a seller above $115, because I think we're stuck in a range," Fisher said. "And obviously I think that this market going down is giving you an opportunity to get long."
(Read more: Here's what will determine crude's next move: Pro)
Natural gas is now trading at the lowest level since August and is poised to break below the key $3.40 level. It has been a rough road for the fuel, but with so much working against it, things could get worse before they get better.
The main problem is that demand has failed to materialize in any sustained way. Looking at long-term weather forecasts, moderate temperatures will be in place for most of the country through November.
Crude oil has continued to trade to new swing lows, and on Monday morning it is trading below the major $94.76 level. This is the lowest level we have seen since June, and at this point, the $93.71 level from June 26 will be seen as the next level of support.
So what has driven crude down so sharply from late August, when it made a high above $112?
First, any geopolitical tensions have largely left the market. Second, inventory data have been bearish, as we have seen a continued build in supply. Third, the knowledge that the Federal Reserve will have to begin tapering its bond purchases has led to a stronger dollar, and consequently hurt crude.
(Read more: Libya may deepen Brent's premium over US oil)
With both the pace of economic growth and the Federal Reserve's next move up in the air, traders say that this week's trading will be dominated by the expectations around, and the reaction to, Friday's employment report.
"It's definitely going to be the jobs report that I'm keeping my eye on, and it's too bad we have to wait till Friday, because I think it's going to make for a very choppy week of trading coming up," said Anthony Grisanti of GRZ Energy. "I think that a lot of traders are just going to focus on that, so you'll see volumes very low."
The jobs report is doubly important, because it will not just give investors an estimate of how many jobs were created in October—it will also help determine the Federal Reserve's next move.
In its Wednesday statement, the Federal Open Market Committee said that it would maintain its $85 billion monthly asset-purchasing program, but noted: "The Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program. ... However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases."
(Read more: The market is getting the Fed all wrong: Nomura)
Economists expect to see 125,000 jobs added according to the nonfarm payrolls metric, which would be the second-lowest number of jobs added of 2013. But as the FOMC indicated, if employment growth suddenly gets much stronger, then the Fed is likely to taper sooner rather than later, which could be very damaging for the market.
On this first day of November, you can expect capital inflows to give stocks an upward bias. But the overall technical picture still looks quite weak.
Friday's and Monday's sessions will be pivotal, as we will see if there is fresh, beginning-of-the-month buying coming into the market from fund managers this late in the year. Meanwhile, it is worth remembering that many traders and investors locked in profits ahead of the FOMC statement on Wednesday.
Equities have continued to consolidate, with the S&P 500 holding one of the tightest overnight ranges we have seen in recent weeks. In Friday morning trading, the S&P December e-mini has stayed quiet, holding Thursday's low of 1,750.25.
Stocks and bonds dipped after Wednesday's Federal Reserve statement, as investors seemed to think a December taper now looks more likely. But George Goncalves, the head of U.S. rates strategy at Nomura, says the market is overreacting, and that the Federal Reserve will continue its $85 billion asset-purchasing program at least into 2014.
"The knee-jerk reaction that we saw yesterday in the equity market and the bond market, and the follow-through today with what's going on with the dollar and currency markets in general" is "really more of a buying opportunity," Goncalves said on Thursday's "Futures Now." The Fed "has to keep [tapering] on the table, but that doesn't mean that they're actually going to pull the trigger come December."
(Read more: Did the Fed just say December?)
Still, Goncalves admits that he, too, was a bit surprised by the Federal Open Market Committee statement. "We were expecting more of a dovish spin," Goncalves wrote in a post-statement note.
Goncalves points to the following description of the economy found in the statement: "Taking into account the extent of federal fiscal retrenchment over the past year, the Committee sees the improvement in economy activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy."
Crude oil may have dropped sharply in recent days. But with the latest build in supplies, and weak job growth numbers from ADP, one wonders why crude oil isn't trading at $90 rather than $96.
The fundamental side of the equation looks very weak. Crude oil supplies have increased by over 28 million barrels in the last six weeks, and with ADP reporting that only 130,000 private sector jobs were created in October, demand should remain quite low. The geopolitical front is quiet, and Europe's economy is struggling.
(Read more: Battered US crude flirts with worst month of 2013)
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