Friday, July 06, 2007

Jobs Report Stronger Than Expected, Bond Yields Move Up

The payrolls report came in a little better than expected (132k vs. 125k), but there were also upward revisions to the prior two months. So the labor sector appears strong, and this is the biggest component to consumer spending. As long as people have jobs, they will continue to spend.

Of course, the strong economic report is causing bond yields to rise further, with the 10-year yield now back up to 5.17%. This is a big move from the 4.99% level we recently visited, but the market has mostly taken it in stride.

Asian markets were mostly up overnight, with China bouncing back +4.6%, but Japan declining. Oil is also higher again, with crude trading near $72.50.

There was also more M&A activity announced, which will likely lead to traders staying long stocks ahead of the weekend.

The leaders in this market have continued to shine. As we get ready for earnings season, I would expect lagging stocks to report some earnings shortfalls, but overall I expected another solid earning season.


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