BayFort View: Nonfarm payrolls rose 528,000 for the month of July and the unemployment rate was 3.5%, easily topping the Dow Jones estimates of 258,000 and 3.6%, respectively. Anything above 200,000 nonfarm payrolls in a month is a robust economy, in normal times ppl would dance at just crossing 200k number so at 528K we are way above it. However, we are in a time where good news is bad news. The reason this is bad news is it gives Fed the ammunition it needs to keep increasing interest rates and so 75 bps hike at the next meeting in september is almost a given unless we get radically different numbers for august. This may give markets a pause for sometime but with inflation data cooling (see crude chart above) from almost all commodities back to pre-war levels, we should get a much lower inflation YoY growth number in August which the Fed will take into consideration and may build a narrative around halting rate hikes as inflations starts to cool which means the rate hike cycle is close to over after september……
