Morning Minutes

Strong Job Growth Sends Yields Soaring and Stocks Sliding Again




Markets which had been quiet through the morning with investors on pins and needles have moved decisively in the wake of this morning’s North American employment numbers.

Both US Nonfarm Payrolls (336K vs street 170K vs previous 187K) and Canada Job Growth (64K vs street 20K vs previous 39.9K) came in much stronger than expected, a sign of a robust job market. Meanwhile wage inflation remained high, and either still increasing or only falling at a slow pace, as shown by US average hourly earnings (4.2% vs street and

The market reaction to this news suggests that investors are likely seeing these reports as evidence keeping the pressure on central bankers to remain hawkish and vigilant on inflation, meaning that interest rates may have to remain higher for a longer period of time or possibly even increase further.

On this news, traded interest rates have jumped again with the US 10-year treasury note yield climbing above 4.80% and the 30-year bond yield taking another run at 5.00%. The US Dollar is rallying again as well, gaining 0.4%-0.6% against, Gold, the Euro, the Pound and the Loonie.

US index futures have turned sharply downward, falling 0.7% to 1.2% in the last few minutes from previously flat positioning, with NASDAQ futures leading the way downward. European markets have pulled back off their highs of the day but are still in the green with the Dax up 0.75% and the FTSE up 0.4%. Commodity action is mixed today with US Crude Oil down 0.9%, but Copper up 0.9%.

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Colin Cieszynski, Chief Market Strategist

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

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