Fed on hold but people are working and spending

The good news from the better-than-expected jobs report is that people are working and if people are working people are spending. The average hourly earnings were a bit light on the MoM at 0.2% versus 0.3% estimate, but the prior month was revised higher to 0.4% from 0.2%. The YoY kicked up from 3.0% to 3.1%. Not runaway wages but moving in the right direction.

The not so great for stocks is if the Fed was reluctant to ease further already, they would be even more reluctant now (but there has been 3 eases in 2019 and that should keep things humming)...

Other negative might be that it gives Pres. Trump more control in the US/China trade negotiations. The US economy is far from a recession. If China resists, he has more ammunition. Also yields could move higher although so far, the gains are contained with the 2 year up 3.6 basis points and the 10 year up 4.1 basis points. Rates still remain relatively low.

US stocks are set to open higher at the bottom of the hour. The futures imply:

  • Dow up 198 points
  • S&P up 21 points
  • NASDAQ up 62 points