Morning Minutes

Bonds and Stocks Retreat as North American Jobs Beat Expectations




Market activity, which had been quiet overnight, has sprung to life following the release of North American employment and wage numbers this morning.  

US nonfarm payrolls (263K vs street 250K vs previous 315K) and Canada employment (2.1.1K street +20K vs previous -39K) beat expectations and in the case of Canada, snapped a losing streak, indicating that the North American job market remains robust. Wage inflation for both the US (5.2% vs street 5.1%) and Canada (5.2% previous 5.6%) showed slight improvement but remain above 5%.

Market action suggests that overall, investors see the numbers as supporting central bank hawkishness with wage growth adding to the hawkish case and job strength weakening the dovish pivot case. US Treasury yields have moved up on the news with the 10-year yield climbing back up above 3.85% and the 5-year yield climbing well above 4.00%. The US Dollar is rallying as well, gaining 0.5% against the Euro, 0.3% against the Pound and 0.4% against Gold. The Canadian Dollar is holding steady, supported by the Canadian job numbers.

US index futures have turned south once again with NASDAQ futures down 1.2%, S&P futures down 0.7% and Dow futures down 0.4%. In a sign of shrinking risk appetite, Bitcoin has dropped back under $20,000 and is down 1.8% on the day.

Commodity action is mixed. WTI and Brent crude oil are up 1.3%, still attracting support from the OPEC+ production cut earlier in the week. Natural gas is down 1.9% while copper is down 1.0%.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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