July non-farm payrolls were a decent beat: July non-farm payrolls +209K vs +180K expected

  • And not just the headline, the unemployment rate was 4.3% despite the tick higher in participation
  • Average hourly earnings up, hours worked solid also

A few (in brief) comments from analysts:

Bill Gross:

  • A rather strong report
  • "I don't think it moves markets much"
  • Despite job growth, its not stimulating economic growth
  • Still needs core inflation back to 2% for Fed to raise rates this year (but winding back of QE to go ahead), Fed probably begins quantitative tightening but won't raise short-term rates this year

Deutsche Bank:

  • There are so few caveats to taint a view that the report was solid
  • Points again to markets significantly under-pricing Fed risks (most obviously for 2018)
  • Will limit the downside for the USD

Barclays:

  • Today's report doesn't change their assessment of labor-market conditions
  • Expects moderate economic growth & gradual Federal Reserve normalization
  • Expecting the solid employment results to continue
  • Expects 3 to 3.5% wage growth by end of the cycle
  • Expect to see higher inflation in next 3-4 months & if so a December rate hike