Good Friday AM,

It has been a rough week for sure.

Markets were already on shaky ground after central banks abroad and our Fed continue clamoring on the need to push rates higher. A quick recap on news that moved markets this week (and put a lot of pressure on bonds which has driven the 10yr note back above 4% for the moment), ADP payrolls report came in at twice what markets expected. Having hindsight of today’s jobs report, ADP was way off but that doesn’t matter now. The Fed minutes shows some dissention in the ranks with some members (mostly the non-voting ones) recommending a rate hike at the June meeting. Markets now fully expect a hike this month and then another in September of November. Today’s jobs report came in tame (almost lame). New jobs created were anemic and well below the trend line. Previous months were revised lower by more than 100k. This should have given us a boost and a recovery but a Friday on a short holiday week in the summer with trading desks unmanned, is not likely going to give us the deserved response from positive data. The charts are ugly. I do not see any reason to float at this time, but I do know that it will get better.

Below is a good piece from the WSJ on today’s jobs report.

U.S. employers added 209,000 workers in June, a sign of slight economic cooling. Austen Hufford and Greg Ip here to take you through the latest Jobs report.

The Jobs Boom Loses Some Air

It’s not a bust, but the jobs boom is losing air. Payroll employment rose 209,000 in June from May – strong by prepandemic standards but lowest since late 2020 and the first time in over a year the jobs number fell short of Wall Street’s expectations. April and May were revised down a cumulative 110,000, which means job growth has been averaging 239,000 a month for five months.

Private payrolls have decelerated even more, rising just 149,000 in June, while the five-month average stands at 187,000. Those payroll figures were corroborated by the separate household survey, which showed employment rose by about the same amount, including when the latter is adjusted to use the same definition of jobs as the payroll survey. As a result the unemployment rate dipped to 3.6% from 3.7%

Some Signs of Easing Wage Pressures

Hourly pay advanced 0.4% in June from May and the three-month annualized increase jumped to 4.7% from an upwardly-revised 4.3%. But looking only at non-management positions, the three-month annualized growth rate decelerated to 4.4%, the lowest since early 2021.

Pay for leisure and hospitality workers, a barometer of how the lowest-paid are faring, grew 0.4% for the month and 5.5% annualized over the last three months, down sharply from 6.7% in May. Employers may feel less pressure to bid up those workers’ salaries as vacancies have dropped a bit this year and the labor force, especially of 25 to 54 year olds, expands. Nonetheless, all those figures are still ahead of the 3.5% to 4% that would be consistent with the Fed’s 2% inflation target.—Greg Ip

Please remain safe and stay healthy, and have a great weekend!