Markets today: Stocks climb as bond traders reload Fed-cut wagers

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Of course, today’s weaker numbers need to mark the start of a new slower trend for multiple rate cuts to seriously be back on the agenda - but, by then, the new fear could be a slowing economy.The market should love this report. In an environment where the market is worried about inflation, a softer jobs report with higher unemployment, lower-than-expected wage growth and job creation shows that inflation pressure from wages is easing.

Following the April jobs report, there is rising optimism that the Fed may be more supportive of the markets now pricing in two possible rate cuts this year.It should be perceived by markets as a welcome breath of fresh air as it will hush the hawkish undertone in the market and any recent stagflation fears. We continue to look through the debate around timing of cuts to the fact that the data, in aggregate and observed over a longer time period, will drive a non-recessionary cutting cycle.

I’m not particularly surprised on the miss on job creation, because we have been running at very high levels for the year. I’m a little surprised on the wage, the 0.2 per cent, that is the one that surprises me. That’s something that one needs to look at much more closely.Overall, data from the April labor market report dampened the market’s view on how strong the U.S. economy is running and has allowed the possibility of rate cuts this year to come back into the conversation.

Rate cuts will come back into focus, and investors should remain vigilant for larger slowdowns in the month ahead. But today, this small amount of bad news relative to expectations will be viewed as good news, and suggest the economy is moderating but remains on solid ground.Today’s report was a far cry from the kind of labour market weakness that would prompt a Fed rate cut.

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