With nonfarm payrolls printing below even the weakest analyst's forecast, the market's reaction has been uniformly dovish with rate-hike odds plummeting, treasury yields tumbling, stocks soaring, dollar down and gold and crypto higher.
The biggest impact of the piss-poor payrolls print was the market basically pricing out a hike in October...
With less than one total hike (22.5bps) now priced in for 2026 (and only 2 more hikes in 2027)...
Yields are all down, led by the short-end...
Which makes sense given that heading into the print (as we previewed perfectly), Goldman's Brian Garrett says the bank's CTA model shows managers "extremely short global bonds (~$390bn notional)." US 10Ys are at 99% of max short and 30Ys at 100%. With systematic funds that short, a weak print, or even a 4.2% unemployment rate, could set off a massive short squeeze in bonds.
Stocks spiked on the report, led by the most rate-sensitive names (Small Caps) and longest duration tech names...
And gold is rising (as the dollar dips)...
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