Business

While the payrolls report (and wage gains) was an unmitigated disaster for anyone seeking "evidence" of an economic rebound (i.e., the Federal Reserve), there was some good news in the Unemployment rate which declined from 4.4% to 4.3%, the lowest going back to 2001.

There is just one problem with the above "silver lining": the unemployment rate declined for all the wrong reasons, because contrary to expectations, the Household Survey reported that the number of employed Americans actually declined by 233K to 152.923 million, the lowest going back to February.

As previewed last night, the jobs "whisper" risk was to the downside, and in what was a very disappointing print released moments ago by the BLS, the whisper was spot on with only 138K jobs added in May, far below the 185K estimate, and below the lowest estimate of 140K. This was the second lowest print going back all the way to last October. Additionally, April's big beat of 211K was revised substantially lower to only 174K, suggesting that any expectation the Fed may have had of "evidence" the recent economic slowdown was transitory was just crushed.

Adam Crisafulli recaps what matters this morning as we head into today's payrolls report, noting that "the inability of TSY yields to rise (along w/the dramatic multi-month curve flattening process) remains a cloud hanging over the equity rally but stocks obviously don’t seem to mind (for now)." Whether this changes will depend largely on one thing: today's wage number - if it comes in above the expected, we may finally get some curve steepening, if not the divergence will continue...

Trading Update

 

The day after Trump pulled out of the Paris Climate Accord, stocks are set for new all time highs with S&P futures up 0.2%, boosted by green markets across Europe and Asia, where the Nikkei rose above 20,000 for the first time since 2015. World stocks are set for new record highs, having already gained 11% so far this year, ahead of today's US nonfarm payrolls which are expected to increase by 185,000 jobs after surging 211,000 in April.

For the first time in history, both the ECB and BoJ balance sheets have grown larger than the Fed's.

The BoJ’s balance sheet topped the JPY500tn (USD4.48tn) mark at the end of May, central bank data showed today.

Furthermore, the latest data also shows the pace of the increase in BoJ's holdings has slowed considerably in recent months.

At the end of May, the central bank’s holding was up JPY70.7tn from a year earlier, more than 10% below the BoJ's official guideline of an annual increase of JPY80tn .