The US payroll data came in better-than-expected with the unemployment rate falling to 3.7% from 3.9%. Earnings were hiring 0.4% versus 0.3%. And non-farm payroll was also stronger at 199K versus 180K.

Just ahead of the report, the stock futures were implying:

  • Dow Industrial Average down -17 points
  • S&P index -4 points
  • Nasdaq index -40 point

The US yield curve before the report showed:

  • 2-year yield 4.647%, +6.8 basis points
  • 5-year yield 4.190% +7.8 basis points
  • 10-year yield 4.191% +6.2 basis points
  • 30-year yield 4.286% +4.1 basis points

After the report (4 minutes after the release), stock futures are moving lower, and yields are moving higher.

  • Dow Industrial Average is now down -67.3 points
  • S&P index is down -14.34 points
  • Nasdaq index is down -102 points

The stock market has to decide if it is too strong (higher rates, higher inflation) or just right (inflation is still coming down). Job growth means stronger economy which can be good for earnings. The concern is the Fed path for rates (it is not what the debt market thinks), and inflation.

In the US debt market currently (3 minutes after the numbers):

  • 2-year yield 4.708% +12.8 basis points
  • 5-year yield 4.256% +14.5 basis points
  • 10-year yield 4.254% +12.5 basis points
  • 30-year yield 4.341% +9.6 basis points

There are about 110 basis points of cuts in 2024 and that is now down from around 125 basis points prior to the release. A lot of cuts were priced in prior to the number. This number will slow that idea up.

Looking at some of the major currency pairs:

EURUSD: The EURUSD fell below its 100-day moving average 1.0763.. The 50% midpoint of the move up from the November 1 low is just around that level of 1.0766. That area is now close risk. Staying is more bearish. On the downside the first target 1.0725 was reached with a low at 1.0723. The current price is trading 1.0739. A move below that level would target the 61.8% retracement of the move up from the November 1 low. That level comes at 1.0707. Risk for shorts on the break lower is now a move back above the 1.0763 – 66 level. Staying is more bearish.

EURUSD falls below 100 day MA

USDJPY: The USDJPY moved higher after the record and retraced 61.8% of the move down from the week's high. Recall from yesterday, the price of the USDJPY sharply on expectations at the Bank of Japan might look to move away from its low-interest rate policy. That took the price below the 200-day moving average but he quickly snapped back higher. The 61.8% retracement comes in at 145.255. The high price reached 145.215. The price is now trading down at 144.15. Price action is volatile. The price before the report was at 144.25. So all the gains have now been erased (as I type).


UPDATE (8:46 AM ET). The major stock indices are rebounding:

  • Dow Industrial Average is now up 20.62 points
  • S&P index is up 2.5 points
  • Nasdaq index is still down but often lows at -43 points

In the US debt market, yields have come off a bit but still remain higher:

  • 2-year yield 4.664%, +8.0 basis points
  • 5-year yield 4.205% +9.0 basis points
  • 10-year yield 4.214% +8.5 basis points
  • 30-year yield 4.325% +8.0 basis points