There's a lot of activity in the financial markets today as participants react to a better-than-expected jobs report for November. Payrolls dropped just 11,000 compared to a loss of 190,000 in October. The consensus was expecting a drop of 100,000. The unemployment rate fell two-tenths of a percent to 10%.

Philippa Dunne and Doug Henwood of the Liscio Report, who are both veteran watchers of the job market, said that the report was "the best since December 2007" with only a few blemishes under the surface.

Sure, employers still made cuts. But by all indications were on the cusp of a job market turnaround. Unfortunately, Wall Street isn't reacting well to the data.

Those reported to be in temporary employment, which is a leading indicator for permanent job creation, increased by 52,000. This was the fourth monthly increase and the third-biggest rise since the data started being collected in 1990. September and October payrolls losses were downwardly revised by a net 159,000 jobs. And finally the hourly workweek, which is also a leading indicator, is increasing at the fastest rate since early 2007.

An initial early morning blast took the Russell 2000 (IWM) up as much as 3% before the sellers pounced. As I write this, the Russell 2000 has cut its gains in half while the large cap indices flirt with their unchanged lines. The NYSE Composite, shown in the chart above, failed to break out of its multi-week trading range despite the good news.

Given that the economy just blew expectations out of the water with a jobs report that clearly indicates the jobs recession is drawing to a close, this wasn't the reception I expected.

Although it's too early to know for sure, a carry trade reversal could be in play. Remember that hedge funds and other highly leveraged institutional investors were borrowing here in the United States at ultra-low interest rates, selling the dollar short, and using the proceeds to snap up hot speculative items like large American stocks, foreign stocks, and gold.

Some of this could be unwinding: The Power Shares Dollar Index Bullish ETF (UUP) is up more than 1.1%, the Street Tracks Gold Trust (GLD) is down more than 3%, and the iShares Brazil ETF (EWZ) is off more than 0.7%.

Another possibility is that professional traders are anticipating the inevitable hike in interest rates as the Federal Reserve mops up all those extra dollars it's been printing. On average, the Fed starts raising interest rates six months after unemployment peaks. Based on this, expect dearer money come May. This will dampen speculative excess and make bond yields look more attractive.

The last few months have been marked by low volatility and steadily rising stock prices. But now that markets are exiting the "sweet spot" of low expectations and easy money, things should get very interesting indeed.

Disclosure: The author does not own or control a position in any of the funds or companies mentioned.

Anthony Mirhaydari is a researcher for the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.