Friday's job report of only 38,000 jobs created in May was the weakest in more than five years. And it pretty much shocked everyone. Some of the market reactions, however, were reasonably predictable. Interest rate yields tumbled along the entire yield curve. Chart 1 shows the 10-Year Treasury Yield (TNX) plunging 10 basis points and closing near the lowest level since February. Naturally, that pushed bond prices sharply higher. Chart 2 shows the 20+ Year Treasury Bond iShares (TLT) surging to a four-month high. The reason for that sharp reaction was that the weak job report pretty much took a June rate hike off the table, and may have jeopardized Fed plans for a hike sometime over the summer. The two-year yield, which is most sensitive to a rate hike, fell even more than the long bond. The plunge in bond yields helped some stock groups like utilities and hurt others like banks.
I hope you can join us for ChartCon 2016 on September 23rd & 24th. I understand it will be online this year which means anyone should be able to attend. I also understand that tickets are going fast. Click here for details.
- John
