June Jobs and Inflation Data Flash Bullish Signal for Bonds
June's jobs report is weaker than headlines suggest, and that's good news for bond traders watching inflation cool.
The bond market just got a gift, and a lot of traders are missing it. June's jobs report looks passable on the surface, but dig in and the numbers tell a different story — one that's decidedly bullish for fixed income.
Weak labor data matters because it takes pressure off the Federal Reserve to keep rates elevated. Fewer jobs and softer hiring mean less wage growth, less consumer spending, and ultimately less inflation risk. That's the chain reaction bond bulls have been waiting for all year.
Read more Evercore ISI Holds Outperform on Apple Despite Price Hikes →
Inflation data running alongside the jobs numbers is reinforcing the same message. When both the labor market and price pressures cool in tandem, the case for the Fed pivoting — or at least pausing — gets a lot harder to argue against. Yields respond to that shift fast.
For retail traders, the play here isn't complicated. Softer macro data historically sends Treasury prices up and yields down. If you've been sitting on the sidelines waiting for a clean entry into duration, this setup is about as clear a signal as you'll get without a Fed press conference.
Don't let a headline number fool you into thinking everything is fine in the labor market. The underlying details of June's report are worse than most people are acknowledging — and that gap between perception and reality is exactly where bond traders can find an edge. Continue reading at MarketWatch.com
