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As the Treasury curve was run down:
And stocks melted up:
It is a mad, mad market interpreting everything as bullish and stopping in all and sundry. US jobs were excellent, which would have terrified the market six weeks ago:
Total nonfarm payroll employment increased by 339,000 in May, and the unemployment rate rose by 0.3 percentage point to 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, government, health care, construction, transportation and warehousing, and social assistance.
…The change in total nonfarm payroll employment for March was revised up by 52,000, from +165,000 to +217,000, and the change for April was revised up by 41,000, from +253,000 to +294,000. With these revisions, employment in March and April combined is 93,000 higher than previously reported.
Wage growth is still motoring along well above 4% and strong enough to keep inflation above 5% but that is no problem for this bubble.
China added to it as well, even though the details of an alleged property stimulus make it look more like a pop gun than a bazooka.
This script writes itself:
The Fed has paused too early again and triggered another stock market melt-up.
The wealth effect will increase economic activity in due course, keeping inflation miles above target.
The Fed will panic and yields jackknife.
Until such a time as it all unravels. I’m talking weeks and months not quarters.
Unless the China stimulus is much greater than what has been leaked, while the AI bubble melts up the Australian dollar is going to melt down.
And then probably keep going down as panic selling sets in afterward.
Written By:
David Llewellyn-Smith
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