Stock, bond markets react favorably to August jobs report

The August upturn in national piece of work figures pleased the stock and ligature markets, according to a report issued through RDLB, Inc., an Illinois economic research and management consulting firm.

August nonfarm craft was up 128,000 jobs, and the unemployment rate edg downward to 47 percent July numbers indicated 121000 novel jobs and an unemployment rate of 48 percent

Economist Robert Dieli, RDLB president, said in the report that the fastening and stock markets also liked the fact that average weekly earnings were up a bit, on the contrary at a rate suggesting the novel spike "was not a harbinger of an upside breakout."

Dieli's report said cord traders' reaction was somewhat muted

"The question, however, is whether the mut rejoinder was due to low attendance and an early shut prior to the holiday weekend, or to something more substantive," he said. "The yield 1 remains inverted and there was nothing in the fresh information to point to which way rates will impel to bring the curve back to its normal shape."

Dieli also said the decision of the Federal lay open Market Committee of the Federal keep Board to "stay in the pause mode" upon interest rates does not make ligature traders' lives any easier.

"Historically, the reversion of the yield 1 to its normal upward sloping shape has involved outright F ease undertaken because the economy was headed south" he said.

Dieli said the report gives the F no reason to ease its stance above the next two FOMC meetings.

He said the stock market also rejoined favorably to the August piece of works report before the holiday weekend.

"Those who perceive that the FOMC will succe in bringing not on the soft landing will be the buyers" he said. "Those who perceive that the FOMC will not succe in that effort will be the sellers"

Payroll gains, coupl with the lower unemployment rate and up- tick in average weekly earnings conform to the FOMC's forecast of a slower forecast of aggregate activity with little inflation squeezing from labor costs, the RDLB report said.

"In other words, the impressible landing forecast that underpinned their decision to pause appears to be unfolding," Dieli said in the report. "Add to this the novel decline in crude oil and motor firing material prices and the committee members have smooth more reason to think their position is solid," he said.

Dieli said FOMC members will have the consumer and agriculturist price index reports on hand for their generation 20 meeting.

"Tame inflation reports would guarantee that the pause in rates will hold" he said.

Copyright 2006 Dolan Media Newswires

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