Bonds & Stocks Slammed After Payrolls Sparks Hawkish Surge In Rate-Hike Expectations

We’re gonna need another ‘dovish’ Powell speech to calm this market down.

This morning’s hotter than expected payrolls print (and reaccelerating wage growth) is not what the market or The Fed wanted to see to keep the ‘pause/pivot’ dream alive and rate-hike expectations are spiking and rate-cut hopes are tumbling…

This sent TSY yields soaring, led by the short-end…

And slammed stocks lower…

And spiked the dollar…

As Peter Tchir notes, the big news is earnings! Last month was up 0.5% instead of original 0.4% and this month was up a whopping 0.6% (versus 0.3% expected). Fed will not like that.

Establishment showing 263k jobs, with an upward revision of 23k to last month, but negative 46k the prior month (almost like we overstate jobs and claw back a bit over time). Household survey showed 138k job losses (with 328k lost last month). Why do we bother with two surveys?

Unemployment rate held steady at 3.7% but only because the labor force participation rate dropped – again!

We should give up some of this week’s gains (on rates, spreads and equities) and jobs, once again seems to be the strongest part of the economy (though Establishment survey seems to see more jobs than ADP or Household, but c’est la vie).

The pre-FOMC blackout period closes and leaves the market on its own to create a narrative that the pause is still alive…