Alrighty then. The jobs number has come and gone, and quite frankly we’ve been hit with a few surprises. The headline nonfarm payrolls print, as you well know by now … absolutely blew away expectations. After what proved to be a pitiful May, the trend is back on at a subpar pace that has the US averaging around 147,000 a month. Participation increased, which unfortunately put downward pressure on wages and forced a sizable increase in the underemployment rate once the seasonal adjustment is removed.
Let’s survey the environment
1) Equities have been relentless this morning, ignoring several technical sell signals at key levels. The leaders? How about the banks or anything to do with consumer finance? Are there higher yields in our future? Treasurys aren’t acting that way—with the exception of the 30-year, which has been volatile all morning.
2) Other strong spots include the discretionary names, industrials, transports and tech. Obviously, this is a tough day for the utility sector.
3) The US dollar has stayed mysteriously flat today in the face of macro that would support a move to the upside. There is Street chatter that the long dollar trade was a bit crowded, and there was a bottleneck of profit-taking.
4) Gold is off its recent highs, but you really must say that the yellow stuff is hanging in there remarkably well on a day where some folks must have some nice profits on the table.
5) Next week, earnings season begins. I am tracking at least 13 Fed speeches at this time. Oh, and the Consumer Price Index report is due on Friday. That should be interesting.
As always, you can find my morning and afternoon commentary here: sarge986.com