As we noted in our preview, today’s payrolls print was indeed “bad news is good news” as the surprise five-sigma miss (-23k) on payrolls (albeit with a drop in the unemployment rate) sent rate-hike odds reeling lower…
“History doesn’t repeat, but sometimes it rhymes. For the third time in as many years, July jobs data saw a mid-summer loss of momentum. While incoming inflation data will be the ultimate arbiter, slowing jobs growth helps support a September hold,” says Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management.
That helped smash Treasury yields lower, led by the short-end…
…which in turn crushed the dollar…
…lifting gold above $4350…
Some good news for Bessent, JPY is strengthening…
Stocks are also soaring, with Nasdaq leading the way…
Admittedly, as JPMorgan’s Feroli flagged, technical effects such unwinding of World Cup-related hiring could have driven the softer payroll print…
Jeffrey Rosenberg, a portfolio manager at BlackRock, says on Bloomberg TV, “I’d be hesitant to just write this report off.”
He says that the decline in the unemployment rate essentially reflects a drop in the supply side of the labor market.
… but for now, the panic among the Fed whisperers that Warsh has unleashed more uncertainty (and is driving up the term premium) is now a back story as attention shifts from inflation back to growth.