Daily Note | May 3, 2024 | Weaker Job Report And PMIs Tank Rates

Markets are up big thanks to bad news = good news and a weaker than expected jobs report. The economy added *only* 175K new jobs, and the unemployment rate rose to 3.9%. US hourly earnings increased 3.9% y/y, the slowest growth rate since May 2021.

On Wednesday, Fed Chair Powell said substantial weakening of the labor market could prompt rate cuts. We now have a weakening labor market, lower GDP growth, and rising inflation.

We also had a big miss on US ISM Services, a key variable for the Fed as that directly relates to their SuperCore CPI number - services ex shelter. US ISM Services PMI Actual 49.4 (Forecast 52, Previous 51.4) but prices paid came in much higher at 59.2 vs 55 estimated.

The ISM Services Employment index was just 45.9, only December 2023 was worse going back to July 2020.

Due to both of these economic data points, interest rates are plummeting. The 10-year yield just broke below 4.50%. The 2-year yield is down to 4.78% (it was at 5.02% just a few days ago).

This should be highly beneficial for our strategy.