AUGUST NONFARM PAYROLLS JUST DROPPED A BOMBSHELL - +162,000 JOBS, NEARLY TRIPLE EXPECTATIONS. The U.S. labor market is far from cooling. The print came in at +162,000 vs the +53,000 to +56,000 consensus, with a +55,000 upward revision to June-July. The unemployment rate held steady at 4.1% . The Numbers Nonfarm Payrolls +162K +53K -23K (July) Unemployment Rate 4.1% 4.1% 4.1% Avg Hourly Earnings (YoY) +3.1% +3.0% +3.1% Avg Hourly Earnings (MoM) +0.3% +0.3% +0.3% Revisions (June-July) +55K The breakdown: · Leisure & Hospitality: +59K - far above the 12-month average of 12K/month · Local Government Education: +42K - offsetting July's decline · Manufacturing: +16K - maintaining recent momentum · Information: -23K - reflecting ongoing tech/adjustment pressures Market reaction - September hike odds jJump to 60% Fed funds futures repriced immediately: · CME FedWatch September hike odds: 60.3% (from ~50% pre-NFP) · 2-year Treasury yield: +5.5bps to 4.389% · 10-year Treasury yield: Climbed to 4.784% · Equity futures: S&P 500, Nasdaq, and Dow all edged lower "Good news is bad news." - Chris Zaccarelli, Northlight Asset Management The Fed Debate - Hawks vs. Doves Hawks: · Warsh at Jackson Hole signaled openness to further hikes if needed to curb inflation · Cleveland, Minneapolis, and Dallas Fed presidents have publicly supported a hike Doves: · Fed Governor Waller (Thursday): If September 11 CPI shows inflation moving toward 2%, he would favor holding rates steady The Real Decider - September 11 CPI Nonfarm payrolls cleared a hurdle, but the final decision rests with CPI. CPI continues cooling Doves gain the upper hand - hike odds decline. CPI surprises to the upside Hawks get ammunition - September hike becomes almost certain Bank of America: "NFP alone is unlikely to be the deciding factor for a September hike. CPI is the core data point." The Verdict August NFP is a dual-signal report: · For the labor market: +162K with +55K in revisions proves the U.S. jobs market remains resilient · For the Fed: It clears a key obstacle on the path to a hike, but September's decision hinges on September 11 CPI Markets have already repriced, hike odds jumped from 50% to 60%, but are still far from 100%. The next week will determine the Fed's final move. $SPY $QQQ $TLT $DXYZ $GLD bitcoin:native