Good Friday AM and Happy Labor Day Weekend,

Today is all about the jobs report.

Biggest report of the month and the one the Fed will focus on come their September meeting. U.S. payrolls grew by 187,000 and the jobless rate rose to an 18-month high in August of 3.8%. The U6 unemployment rate which is far more accurate and looks at both unemployed and underemployed people is 7.1%… Yup… Additionally, hourly earning which is a further proxy for inflation on top of being an employment metric, rose slower than expected. All sounds like an economy with slowing employment and it is, but Wall Street for this moment (I expect it to change), isn’t satisfied employment is slowing quickly enough for the Fed.

Bonds are selling off in a small way.

The 10-yr is taking the biggest hit with the yield back up to 4.20 (was as low as 4.05 this am) and mortgage bonds are off about 1/8th of a point. Nothing to get too concerned about and I am confident this ship will turn around soon but for now, that how we are trading. This is also why I do not recommend floating into a big news release.

Keeping it moderately short today and only sharing two commentaries. One on employment, the other on inflation. The graphs spell out the whole deal…

Could the labor market be stabilizing at levels that seemed familiar in 2019?

Job growth is cooling from the rapid pace of 2021 and 2022, when businesses raced to rebuild their workforces and adjust to postpandemic shifts in demand. Nonfarm payrolls rose by 187,000 in August and gains have averaged 150,000 over the past three months. By comparison, the average for all of 2019 was 164,000. The unemployment rate last month climbed to 3.8%, the highest since February 2022 and very close to the 2019 average of 3.7%. Wage growth remained elevated but is easing. For nonmanagers, average hourly earnings rose 4.5% from a year earlier in August, the slowest pace since June 2021. The corresponding figure averaged 3.6% in 2019. Monthly data tend to be noisy, but the latest Labor Department report suggests the jobs market is easing back toward prepandemic norms, when the labor market was strong but not overheated.

The latest figures leave the Federal Reserve on course to hold rates steady next month as officials seek to bring down inflation without triggering a needlessly severe downturn. The Fed’s preferred gauge of consumer prices, the personal-consumption expenditures price index, ran at a 2.1% annualized rate over the three months through July, close to the Fed’s 2% target. Core prices, which strip out food and energy, rose at a 2.9% annualized rate over the previous three months, the lowest since January 2021.

Please remain safe and stay healthy, enjoy the holiday weekend, and make today great!