Much anticipated NFP data release came out last Friday – the numbers fell short of expectations and previous report, only 209K jobs were created over the last month vs. 288K in June while averaged level of expectations was 233K.


Albeit at the surface data was not devastatingly bad, at the slightly closer examination the report clearly demonstrates the dolldrums the US labor market is in – the average hourly compensation stagnates if accounted for CPI numbers (the former is up 0.2% MoM while the latter is up 0.2% MoM), the average number of working hours stays the same for the fifth month (34.5 hours/week).


The lack of good news was greeted by stock market with tepid enthusiasm – SP500 futures jumped from 1912 to 1923 over the next 15 minutes. The viable explanation of such market reaction would be diminishing expectations of interest rate hike by Fed Reserve. The rationale behind this anticipations seems obvious – the stagnating wages do not create conducive conditions for inflation in consumer prices, thus leaving Fed Reserve ability to keep interest rates low for the forthcoming time.


This leaves market players with one and one only feasible conclusion – the rate hike is not coming in the nearest future.
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