NFP missed the expectations
While None Farm Payroll again missed the expectation on 559K, less than 650K estimates, April upward revision also was minor than getting the attention, only 12K from 266,000 to 278,000. According to a Labor Department report Friday, with 559K employed, the unemployment rate fall to 5.8% from April`s 6.1%, but the market still losing 7.6M employees from the pre-pandemic level.
On the other hand, giving the market was disappointed with today`s data; however, these numbers confirm that the economy is rising as it is supposed to be raised in economic cycling after the recession.
A slower increase in the labor market mainly needs a faster recovery in the service sector, especially in the leisure and hospitality industry, which has suffered much more than other health crises.
The published data for May confirms that the reopening of the economy because of increased coronavirus vaccination rates helped the market sentiment. It was evident in PMI data that we had this week and today`s 0.5% increase in average earnings. More social activities and easing the restrictions must end with a positive reaction in the labor market as well, and we must see that in Jun numbers.
According to the published Purchasing Managers Index, C.P.I., and PCE data, we have to wait for higher inflation in the coming month, especially now with faster increasing average income by 0.5% monthly in May, far above 0.2% expected. Even though the labor market can not recover as fast as hoped, higher inflation must change the F.O.M.C. ideas in the following weeks. Now we have to wait for next Thursday and C.P.I. data, which is the next key event! And this data will be published after the Fed entered its blackout period, and it means the bank can not dismiss elevated prices as "transitory."
Market reaction and expectation!
With the reduction of inflation expectations, US 10-years Treasury yields also decreased to 1.557%, the USD index lost 0.38% to touch 90.15, and US Indices moved higher.
USD Index: After a sharp fall, DXY still technically did not turn to the downtrend, and as long as it is trading above the 90.00 level, it can count on its higher numbers to be seen.
SP500: Brake out above the range, telling us that positive market sentiment and cash flow, despite the inflation worries, can attract the cash to the stock markets, instead of having it in the bank account and losing with increasing inflation.
Gold: If XAUUSD wants to confirm its uptrend, the current significant level of $1,900 needs to trade stable above $1,900. Fundamental data says that increasing inflation, which we will have more data about next week, is supposed to help Gold`d bull.
