5 Thoughts on the Disappointing August Jobs Report


Now that we're past the initial reaction to the weaker-than-expected August NFP report, let's take an in-depth look at how the market's doing:

1) Oil Wins!

Oil is the big winner off the NFP report.

WTI crude was red in the early going, but it's now up 2.4%, and the Vaneck Vectors Oil Service ETF (OIH) is up 1.4%.

And XLE is the best performing S&P sector ETF with a 1.1% gain.

Plus, this is happening despite a major currency move…

2) Impressive Dollar

USDJPY dropped to 102.811 post-NFP, but it's rocketed up to 104.176.

This really surprised me.

I thought the light numbers would result in profit-taking, but I guess traders are happy to keep riding this freight train to the moon.

This, along with the big selloff in bonds, is helping banks, especially the regionals.

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3) Miners Rock

Even with the dollar strength, gold is up 0.4% on the NFP miss.

And the gold miners (GDX) are having a great day with a 1.9% pop following yesterday's solid gain — wow.

But remember, GDX just dropped from $31.79 on August 12 to $25.17 yesterday, so the pendulum had to eventually swing back the other way.

4) Rate Hike Odds

Fed rate hike odds are essentially unchanged.

Fed funds futures imply a 30% chance of a September rate hike, down from 34% yesterday.
But December is holding steady at 60%.

Traders will probably wait to see September numbers before really freaking out over employment data.

5) Fed Heads

Fed officials will immediately continue their press tours, and there's a chance they'll comment on today's jobs numbers.

Lacker will be speaking in Richmond today at 1:00 p.m. ET

And we have Williams next Tuesday and Rosengren next Friday.

Only Rosengren is a voting member of the FOMC.

The economic calendar is pretty light next week, so maybe these folks will get even more attention than usual, especially if they get feisty.

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