Unemployment at Six Year Low in June Jobs Report

Economic Data

- (IE) Ireland Q1 GDP Q/Q: 2.7% v 1.2%e; Y/Y: 4.1% v 1.8%e
- (IE) Ireland Q1 Current Account: €1.0B v €3.3B prior
- (US) Jun Challenger Job Cuts: 31.4K v 53.0K prior; Y/Y: -20.2% v +45.5% prior
- (EU) ECB leaves Main Refinancing Rate unchanged at 0.15%, as expected
- (US) Jun Change in Nonfarm Payrolls: +288K v +215Ke; Change in Private Payrolls: +262K v +215Ke; Change in Manufacturing Payrolls: +16K v +10Ke
- (US) Jun Unemployment Rate: 6.1% v 6.3%e; Underemployment Rate: 12.1% v 12.2% prior; Change in Household Employment: +407K v +145K prior
- (US) Jun Average Hourly Earnings M/M: 0.2% v 0.2%e; Y/Y: 2.0% v 1.9%e; Average Weekly Hours: 34.5 v 34.5e
- (US) Initial Jobless Claims: 315K v 313Ke; Continuing Claims: 2.579M v 2.56Me
- (US) May Trade Balance: -$44.4B v -$45.0Be
- (CA) Canada May Int'l Merchandise Trade: -C$150M v -C$300Me
- (BR) Brazil Jun Services PMI: 51.4 v 50.6 prior
- (US) Jun Final Markit US Services PMI: 61.0 v 61.0e
- (US) Jun ISM Non-Manufacturing Composite: 56.0 v 56.3e
- (US) Weekly EIA Natural Gas Inventories: +100 bcf vs. +99-103 bcf expected range

- Both the DJIA and S&P500 hit fresh all-time highs this morning in the wake of the stunning June jobs report, while the yield on the 10-year UST crept 3.5 bps higher to 2.659%. As of writing, the DJIA is up 0.38%, the S&P500 is up 0.32% and the Nasdaq is up 3.36%.

- The June jobs report was much, much stronger than expected, with both the nonfarm and private payrolls figures crushing expectations and unemployment dropping to 6.1%. April nonfarm payrolls were revised up to 304K from 282K and in a very favorable sign the June labor force participation rate remained steady at 62.8%. After the jobs data, Goldman Sachs now sees a risk of rate hikes in late 2015, but refrained from formally changing their standing guidance for hikes in Q1 of 2016. JP Morgan pulled forward expectations for rate hikes to Q3 of 2015 from Q4 prior. Note that June ISM non-manufacturing index eased to 56 in June from Mays 56.3, which was the highest since August.

- There has been a fair amount of hoopla this morning regarding the Dow moving above 17,000 for the first time ever, however more thoughtful analysts point out that this archaic price-weighted index is only up 2.9% year-to-date, whereas the S&P 500 has added 7.2% YTD. Stagnant prices of large-cap names like Boeing and Verizon have held back the index so far this year.

- The ECB decision was a big non-event today, with rates left unchanged and little new in the post-decision press conference. President Draghi said that interest rates were at their lower bound, making monetary policy less effective. He also announced that the ECB would shift to a six-week meeting schedule and begin publishing meeting minutes, effective in January 2015. FX markets moved on the jobs data, with EUR/USD dropping sharply from 1.3650 to test below 1.3600 right at 08:30ET. USD/JPY tested as high as 102.27 before trading off.

Looking Ahead

- 13:15 (EU) ECB's Draghi speaks in Berlin
- 13:00 Early close for US equity and bond markets