Very solid jobs jigure upside beat – already Wednesday I talked with clients that the bar was set too lowe. This figure outdid expectation, and sent Sep rate hike odds to 60%, that‘s less than two thirds by midweek, but still enough to send stocks (and crypto) packing.
Packing for good? I‘d examine breadth metrics, and also point to tech leading Friday even though yields pushed higher. Job market isn‘t in danger of falling apart, hourly earnings look decent disregarding oil pushing higher, but energy prices are working their way higher (new tanker for tanker US policy) and through the economy, more is to come in terms of absorbing the impact of current higher prices, giving Fed ample incentive to mind rising inflation and hike.
Yet, it‘s the reaction across the spectrum that counts the most – Friday was about identifying fast which assets will decline the most thanks to the hot figure, and it was ES and BTC rather than NQ. Gold short didn‘t then bring gains as the decline didn‘t continue beyond the first hour. Very tellingly though, Russell 2000 remained very resilient (since Wednesday already), which isn‘t a sign to ignore.
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