Economic Update - Jobs are too strong?
Stocks opened lower today, crawled back and have since fallen back down again. Markets initially were reacting negatively to a stronger than expected jobs report as investors believe it may open the door for the Fed to increase rates more than expected for the remainder of the year. Fed fund future prices are now showing 1.25% in increases for the rest of 2022, up from 1% yesterday.

Nonfarm payrolls increased by 528,000 in July, crushing expectations of 258,000 and up from 398,000 last month. The U.S. economy has now recovered all of the jobs lost due to the pandemic. The unemployment rate fell 0.1 to 3.5%, back to its pre-pandemic level and matching the lowest level since 1969. Average hourly earnings rose 0.5% for the month, more than expected, and were up 5.2% over the past year.

Treasury yields are higher this morning, with the 2-year T yield up 16.8 basis points to 3.21%, the 5-year T yield up 17.7 basis points to 2.95%, and the 10-year T yield up 16.0 basis points to 2.84%. Advance rates are higher throughout much of the curve.image
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