The Standard & Poor’s 500 moved to another record today and closed at 2190.15, up 0.28%, on news that U.S. and Chinese retail sales were weaker than expected and that the Japanese economy went back into the tank after a strong first quarter for growth.
The U.S. economy added 255,000 net new jobs in July, the Bureau of Labor Statistics reported this morning. The government revised June’s jobs total upwards to 292,000. The headline unemployment rate remained at 4.9% as workers on the sidelines re-entered the labor market. The full unemployment rate, which counts discouraged workers no longer looking for a job and part-time workers who would prefer a full-time job ticked upwards to a seasonally adjusted 9.7%
In the second quarter the U.S. economy grew by an annualized 1.2% instead of the 2.6% forecast by economists at the end of last week. This follows on 0.8% growth in the first quarter.
While it did nothing on Wednesday to change interest rates, the central bank said quite a lot about the U.S. economy. This language does clear the way for a possible interest rate increase in September
The yield on 10-year Treasuries rose to 1.52%, the highest level this month (and prices fell). Last week the yield on the 10-year Treasury hit a record low of 1.318%. The climb in Treasury yields is likely to be temporary, in my opinion. The market is coping with a series of big auctions this week
At the same time as government statisticians announced the creation of 287,000 jobs in June, they also revised May’s already shockingly weak 38,000 job figure down to just 11,000. That leaves us looking at a swing from 11,000 to 287,000– or 276,000 jobs in a month. An $18 trillion economy just doesn’t move that fast. So somewhere in the month to month data there’s likely to be a statistical glitch.
Today it looks like the financial markets are holding their collective breath waiting for tomorrow’s official jobs report for June. As of 3 p.m. New York time the Standard & Poor’s 500 stock index was down a slight 0.23%. At least that’s the impression an investor gets looking at the U.S. equity markets. But in the bond market, which I’d argue is more important than the market for stocks right now, there’s considerable turmoil not so far under the surface
The minutes from the Federal Reserve’s June 15 meeting, released today, make it clear that the decision to hold rates steady instead of increasing them had to do with more than uncertainty about the upcoming Brexit vote in the United Kingdom. Fed members were just as worried about the surprisingly weak 38,000 jobs created in May
