A weaker than expected NFP headline at 559k vs 650k and while the unemployment rate dropped to 5.8percent versus 5.9% expected, this had been due to the 0.1ppt fall in the workforce participation rate. Elsewhere, typical earnings beat expectations on both the monthly and yearly fee and so signaling an overall mixed accounts. For risk assets this is somewhat the goldilocks situation, given that while over 500k jobs brightens the economic outlook, the miss relative to expectations slightly dampens calls for tapering from the long run.
USD Drops and Gold Pops
The USD index had come under selling pressure initially with bulls disappointed from the miss expectations, especially after the strong ADP report. But, as I mentioned earlier, the ADP report hasn’t exactly been the best predictor of the NFP report, leaving USD bulls excessively vulnerable. Gold prices jumped to daily highs involving the pullback in the USD, while treasury yields saw a more choppy reaction with drawback immediately pared.
