A far better-than-expected nonfarm payrolls report by the Department of Labor this morning sent the precious metals tumbling yet again on Friday. Spot gold sank all the way down to $1,217/oz, its lowest in nearly four months, while spot silver lost 1.5% to trade below $15.80/oz. Platinum and palladium were each down slightly less than their cousins, losing 0.2% and 0.6%, respectively.
The June nonfarm payrolls showed 220,000 new jobs were added in the U.S. during the month. April and May’s jobs numbers were also revised higher. This was obviously taken as a bullish sign for the American economy, although economists were less enthusiastic about the pace of wage growth. Wages were only 2.5% higher year-on-year, but did advance 0.2% during June. The unemployment rate ticked up slightly to 4.4%.
One of the sore spots in the breakdown of the payrolls was the third consecutive month of job losses in the automobile sector. Surprisingly, however, the much-maligned retail sector actually broke its four-month streak of negative job growth.
In response to the NFP report, the dollar clawed back some ground on the DXY index, recovering to 96.1 after falling as low as 95.8 yesterday and touching this low again during the early morning hours. The strong payrolls data also helped counter yesterday’s slightly disappointing jobless claims figures from ADP. Stocks were down across Europe on Friday, while the major U.S. indices were all sharply higher during early trading.
Interestingly, the recent selloff in the bond market that has sent the 10-year Treasury yield all the way to 2.39% is also negatively impacting equities. (Usually, the two tend to move in opposite directions.) There has been a general return of volatility to the stock market after months of steady, incremental gains. More surprising is the fact that the 10-year T-note yield has jumped 25 basis points in a matter of just two weeks. Such a large move is likely only attributable to hedge funds exiting the market; if yields continue to rise, we may be seeing the reversal of a bull market in Treasurys that has persisted for a staggering three decades. Gold has similarly seen mounting selling pressure as investors shun safe havens to take on more risk. The last time that bonds and shares on Wall St were falling in tandem in this manner was in 2013, when the Fed was tapering off of its quantitative easing asset purchases.
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