U.S. Employment Data Mixed

STOCK INDEX FUTURES

Nonfarm payrolls in May increased 390,000 when a gain of 325,000 was expected. Private payrolls increased 333,000, which compares to the anticipated 310,000 advance and manufacturing payrolls were up 18,000 when a gain of 38,000 was predicted.

Average hourly earnings increased 0.3% when an increase of 0.4% was expected.

The unemployment rate was 3.6% when 3.5% was expected.

The 8:45 central time May PMI composite is anticipated to be 53.5.

The 9:00 May Institute for Supply Management services index is predicted to be 56.3.

Yesterday, Federal Reserve Vice Chairwoman Lael Brainard said she supported plans to hike interest rates by a half-percentage point at a meeting later this month and again in July. In addition, she reduced speculation that the central bank would take a break from raising rates after that when she said, “Right now, it’s very hard to see the case for a pause” in September.

Lael Brainard will speak again today at 9:30.

It is likely that there will be at least a partial recovery after her speech is out of the way.

CURRENCY FUTURES

The euro currency is lower on news that retail sales in the euro area decreased 1.3% month-over-month in April of 2022, which is the first decline this year and compared to market forecasts of a 0.3% increase.

The euro zone May Services PMI was 56.1 when 56.3 was predicted.

Germany’s May new car registrations fell 10% to 207,199.

A survey of economists indicated efforts by European Central Bank hawks to secure an initial 50-basis point hike in interest rates will fail as policymakers will likely agree to a series of smaller hikes.

Interest rate differential expectations are neutral for the currency markets.

INTEREST RATE MARKET FUTURES

Financial futures markets are predicting there is a 98.5% probability that the Federal Open Market Committee will hike its fed funds rate by 50 basis points and a 1.5% probability that the  rate will increase by 75 basis points at the June 15 policy meeting.

The interest rate market futures appear to be making a bottom on the charts, and the fundamentals are improving.

I expect futures will at least partially recover after Lael Brainard’s 9:30 speech is out of the way.

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