Bonds & Bullion Jump, Dollar Dumps As Rate-Hike Odds Slump After Payrolls Miss

As we noted in our preview, today’s payrolls print was indeed “bad news is good news” as the surprise five-sigma miss (-23k) on payrolls (albeit with a drop in the unemployment rate) sent rate-hike odds reeling lower…

“History doesn’t repeat, but sometimes it rhymes. For the third time in as many years, July jobs data saw a mid-summer loss of momentum. While incoming inflation data will be the ultimate arbiter, slowing jobs growth helps support a September hold,” says Lindsay Rosner, head of multi sector fixed income investing at Goldman Sachs Asset Management.

That helped smash Treasury yields lower, led by the short-end…

…which in turn crushed the dollar…

…lifting gold above $4350…

Some good news for Bessent, JPY is strengthening…

Stocks are also soaring, with Nasdaq leading the way…

Admittedly, as JPMorgan’s Feroli flagged, technical effects such unwinding of World Cup-related hiring could have driven the softer payroll print…

Jeffrey Rosenberg, a portfolio manager at BlackRock, says on Bloomberg TV, “I’d be hesitant to just write this report off.”

He says that the decline in the unemployment rate essentially reflects a drop in the supply side of the labor market. 

… but for now, the panic among the Fed whisperers that Warsh has unleashed more uncertainty (and is driving up the term premium) is now a back story as attention shifts from inflation back to growth.