Not strong enough to excite the bond sellers, not weak enough to worry the Fed.
May's 175,000 payrolls report brought something for everyone. The equity market was happy because it means the Fed will continue its $85 billion a month purchase program.
Bond traders could see an eventual end to quantitative easing as the economy gradually improves, but without the immediate trauma of an unpredictable sell-off. Even the rise in the unemployment rate to 7.6% was positive as people returned to the job market.
Only the flat average hourly earnings and the loss of 8,000 manufacturing jobs were unequivocally negative. The factory figure, particularly when combined with the downward revision to April from flat to -9,000, the third loss in a row is slightly ominous, as the manufacturing sector usually leads in economic trends.
Chief Market Strategist