Morning Minutes

Stocks Turn Down as Nonfarm Payrolls Exceed Expectations




US index futures are in the red this morning with Dow futures down 0.5% and NASDAQ futures down 1.1%, giving back some of yesterday’s gains of 1.3% for the Dow and 2.7% for the NASDAQ. Overseas trading has been mixed with the Nikkei up 1.0%, the Dax flat and both the FTSE and the Hang Seng down 1.0%. Cryptocurrencies have also been struggling overnight with Bitcoin down 1.2% and Ethereum down 2.0%, a sign of cautious investor sentiment.

US nonfarm payrolls for May came in better than expected (390K vs street 325K) while April payrolls were revised up slightly, easing some of the fears of a slowdown that came out of yesterday’s disappointing ADP payrolls report. Average hourly earnings were in line with expectations (5.2% over year vs previous 5.5%), indicating that wage inflation may be levelling off but remains at a high level.

With nonfarm payrolls indicating continuing job growth, and average hourly earnings indicating high wage inflation, investors don’t appear to be seeing any reason for the Fed to slow its monetary tightening program. The US 10-year treasury note yield is trading back up above 2.95%, once again approaching the 3.00% psychological barrier, putting a headwind in front of stocks and bonds.

Commodity action is mixed today. WTI crude oil is up 0.2% even after OPEC+ announced yesterday plans to increase the pace of monthly production increases from 432K bbl/d to June to 648K bbl/d for July and August amid ongoing questions about Russian exports. Copper is down 0.2%.

SIA Wealth In The Media:

Chief Market Strategist Colin Cieszynski appeared on BNN Bloomberg recently where he discussed stagflation and tactical investing strategies.  

Stagflation is here now: SIA Wealth’s Colin Cieszynski

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Colin Cieszynski, Chief Market Strategist

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

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