U.S. Stocks & Bonds Continue Rally After U.S. Jobs Report
Image courtesy of Shutterstock

Stocks, Bonds Continue Rally After August U.S. Jobs Report

By:Christopher Vecchio - CFA

While the economy added 7,000 jobs more than were forecasted, the unemployment rate unexpectedly rose to 3.8%

  • The US economy added +187,000 jobs in August, higher than the forecast of +170,000.
  • The unemployment rate (U3) unexpectedly rose to 3.8%.
  • Stocks and bonds continued their bullish momentum that has/had been building in recent days.

Fig. 1: Intraday price percent change chart for /ES, /NQ, /ZN, /ZB, and /GC
Fig. 1: Intraday price percent change chart for /ES, /NQ, /ZN, /ZB, and /GC

A week of trading defined by an intense focus on US labor market data reached its apex on Friday with the release of the August US jobs report.

The nonfarm payrolls report showed a headline gain of +187K versus the consensus forecast of +170K, while the prior reading was revised lower from +187K to +157K. The household employment survey indicated that the unemployment rate (U3) unexpectedly rose to 3.8% from 3.5%. The labor force participation rate increased to 62.8% from 62.6%. Wages (average hourly earnings) eased to +4.3% y/y against an expected rise of +4.4% y/y.

The slight beat relative to expectations on headline jobs growth keeps the US labor market on solid footing. According to the Atlanta Fed Jobs Calculator, the US economy only needs to add +100K jobs per month through the rest of 2023 to keep the unemployment rate at 4% or lower.

The net result has been a continuation of what’s been seen over the course of the week since the release of the July US JOLTs report on Tuesday. Stocks, led by /RTY, hit fresh session highs, while bonds across the curve, from /ZT to /UB, have continued to rally (yields down). The DXY Index fell, led by strength in /6J.

The August US jobs report is about as ‘goldilocks’ as it can get for markets. Steady jobs growth? A rise in the unemployment rate? Moderating wage growth? Higher labor force participation? Check, check, check, and check. The narrative that has been building in recent days – that the Federal Reserve need not raise rates again this cycle – just received a potent piece of evidence in its favor.

Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx 

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer.  Options, futures, and futures options are not suitable for all investors.  Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.

tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.

tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.

tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.

© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved.  Applicable portions of the Terms of Use on tastylive.com apply.  Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.