The U.S. employment report for July was very strong and showed the rebound in jobs picking up as the economy recovers from the worst of the pandemic. For the month, 943,000 new jobs were added and the unemployment rate fell by 0.5% to 5.4%, which surpassed analysts’ expectations. Wage gains were also strong at 0.4% for the month and 4.0% year-over-year. The strong employment report puts more pressure on the Federal Reserve to start tapering its bond purchases in the coming months.
Last week, real yields popped higher after falling for several months and commodity prices fell. Gold and other metals saw a sharp sell-off, with gold falling to approximately $1,700 per ounce in Sunday night’s trading, its lows from $1,820 the week prior.
I expect continued strong growth and solid corporate earnings to help support equity prices, which are near all-time highs, even if yields increase over the next few weeks. The potential for a pullback in monetary stimulus will likely make the markets more volatile in the coming few months.
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