NFP reaction preview

April’s NFP (released May 2nd) came in hot at 177,000, handily beating expectations. This print started creating the pressure that was released when Trump and China signed their pause agreement 10 days later.

May’s NFP comes out tomorrow June 6th. It is expected to show a deceleration down to a monthly gain of 130,000 jobs. This jobs slow down but still higher number is viewed by the market as bullish as it keeps interest rates high due to lack of recession, more money then gets funneled back into economy via high coupons, pushing stocks higher. Add in the big beautiful bill, which will pass despite Elon’s bellyaching now that he didn’t save the EV tax credit, should send bonds down, yields higher and net:net be very bullish.

ADP on Wednesday had different ideas, as it missed big to the downside. This caused bonds to rally above a key level (and as of Thursday morning hold above that) and stocks sold off on the print and were unable to get off the mat the rest of the day. Still flat a day later.