Treasury yields are moderately higher across the curve as the market digests the June jobs report. Nonfarm payrolls added 4.8 million jobs in June, well above the 3.23 million expected gain, and the headline unemployment rate fell 2.3 points to 11.1% (12.5% expected). It’s another example of the highly unusual times we find ourselves in when the U.S. labor market adds 7.5 million jobs in 2 months and the unemployment rate is still in double digits. Looked at a different way, we’ve now retraced approximately 40% of the 20 million jobs lost (establishment survey) in just two periods. Average hourly earnings fell 1.2% in June, which is positive in that it’s likely the result of lower-wage workers returning to the workforce. This was a solid report that exceeded expectations by a wide margin, although forecasting economic data in this environment is beyond challenging. The question for many is how the resurgence in COVID-19 cases in late June is affecting the reopening or, more importantly, the scaling back of the reopening. Regardless, this report is being received well by equity investors, with S&P 500 futures up 1.2% less than 30 minutes after the report was released.

Jason Haley
Chief Investment Officer