The data showed that the pace of hiring accelerated in June as the supply of the labor market eased, and non-farm payrolls in the United States increased by 850000 in June, the highest in 10 months. The May reading was also revised upwards to 583000 from 559000. The upbeat US non-farm payrolls data strengthened the prospects for the US economic recovery and boosted market sentiment. The average monthly hourly rate increased by 0.3%, and the annual rate increased by 3.6%, which is basically in line with market expectations. Many companies are handing out recruitment bonuses, and more and more people are asking for more-because of inflationary pressures and tighter market conditions. As the data continue to point to growth, economists now expect US GDP growth to hit an annualised rate of 10 per cent in the second quarter.

From the Fed's point of view, the results of the non-farm data are "just right", the job market is still recovering, and it is not too fast to worry that the market will not be able to overreact to the data, so that the Fed has plenty of room to make more choices. For investors, today's non-farm data show that the US labor market is one step closer to the Fed's expectations, but it is disappointing that it does not urge the Fed to act faster. After the release of non-farm data in June, the dollar fell slightly, and so far there has been no exciting market in the foreign exchange market. However, this does not raise further concerns about the Fed's tightening stimulus, as job growth does not seem to be fast enough for the Fed to tighten quickly. The dollar index (DXY) has fallen from a three-month high, and so is the overall curve of Treasury yields.

Fed watchers widely expect the Fed to unveil more details on scaling back its bond purchases at its annual seminar in Jackson Hole, Wyoming, at the end of August, before starting to slow down later this year or early 2022. 

For now, the positive tone of the bond market has boosted the stock market. The yield on the 10-year Treasury note has fallen from a high of about 1.75% this year. At this level, technology and growth stocks are under pressure. But with yields hovering below 1.6%, these stocks have rebounded. On Friday, the 10-year Treasury yield was 1.43 per cent, a level that contrasts sharply with the US economy, which is expected to grow by more than 10 per cent in the second quarter, although the lower yield may be good for technology stocks.

Steven Wieting, chief investment strategist at Citibank Private Bank, said that as the US economy peaked, the time was ripe for investors to shift from popular cyclical trading to technology and growth stocks. Cyclical stocks have been one of the best performers so far this year. Affected by the rebound in oil prices, energy stocks rose 44.5%, while financial stocks rebounded 25.2%. By contrast, growth stocks in the s & p 500 rose 14.3%, slightly less than the 15.5% gain in the s & p 500. Technology stocks are up just 14.9% this year.

Risk Warning: The above content is for reference only, and does not represent JRFX’s position. JRFX does not assume any form of loss caused by any trading carried out in accordance with this article. Please consult your financial planner for your investment portfolios and manage your own risk.

JRFX is an online CFD broker providing more than 50 products for Forex, metals and commodities. Open a trading account within a minute. Deposit 100USD and download our MT4 trading platform now!