The highly anticipated US Jobs report was released on Friday.
Payrolls increased by 559,000 for the month of May, while the median estimate from Bloomberg’s economist was for a rise of 675,000.
April’s payrolls were revised to 278,000 from 266,000.
The jobless rate fell to 5.8%.
The labour force participation rate was 61.6 vs 61.7 in April.
This is below pre-pandemic 63.3%, and it is believed that the Fed watches this very closely.
There are different ways to analyze this report, but the most appropriate and commonly used means by the media is “goldilocks.”
Not too hot, not too cold, just right!
You can’t argue with that view, as the markets rallied to close the week on a high note.
With that report, the market is probably thinking that the feds will be further away from considering any actions like tapering and even further away from raising rates.
We have an economy that is recovering but still has some ways to go to get it to pre-pandemic levels.
Here are the closing levels :-
Dow Jones 34,756.39 +179.35 +0.52%
S&P 500 4229.89 +37.04 +0.88%
Nasdaq Comp 13,814 +199.98 +1.47%
US 10Y 1.557%
The Nasdaq was the biggest gainer with mega caps leading the way.
It is obvious that the Nasdaq was taking its cue from the low levels in the US 10Y yields.
Janet Yellen was quoted as saying, “We’re seeing some inflation but I don’t believe it’s permanent,” on a press conference Saturday after the G7 finance meeting.
She also said, “We – at least on a year-over-year basis – will continue, I believe, through the rest of the year to see higher inflation rates — maybe around 3%.”
She again used the word, “transitory”, which means the high inflation numbers should subside rather than continue.
We will be getting the consumer price numbers on Thursday. I believe it is probably going to be closely watched.
If you are holding tech stocks, you will probably want to see how the US 10Y reacts to this number.
As for now, again, we are touching distance from making new all-time highs in S&P and Dow. Even Nasdaq is looking to try and break its all-time high soon.
The odds are that we will probably go higher, test, and maybe break the highs in the near term. If there are any dips, the market will most likely buy into them.
Source: CBOE, Bloomberg.
This commentary is written by James Gomes
James has been in the finance industry for over 30 years and most recently worked for a large US bank for more than 20 years.
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