Last month's employment report can be classified in one way: steady as she goes. The data were basically in-line across the board: the headline number (217,000), hourly earnings, and private sector jobs growth. Even the revisions were modest.
What did bonds do? Bonds rallied, yields declined, and stocks rallied modestly. The economy is improving, but not accelerating, making it unlikely there will be a change in the narrative over Federal Reserve monetary policy.
The average monthly job gain this year is 231,000—the good news is that's the fastest pace since 2004. However, one thing's for sure: 217,000 jobs will not likely get you to four percent gross domestic product (GDP) growth. For that, we'd need closer to 300,000, which is at least 280,000 on a consistent basis, to get to four percent. Especially if you look at the trade numbers this week.
Meanwhile, the hourly earnings paint a rather dour picture, as there's no inflation there. In considering rate policy, the Fed looks at wage pressures. The Beige Book report indicates there is none of that anywhere in any of the 12 Fed districts. Month over month, the indicator is up 0.2 percent, which is pretty anemic.
The 10-year Treasury yield tells you it bond investors are not impressed with the pace of growth or with inflation risk. As long as the market is signalling improvement without a huge acceleration, bulls say it's Goldilocks for a few asset classes— like stocks and bonds.
Elsewhere
1) Three initial public offerings (IPOs) priced overnight, including one delayed from May. On the Big Board, software solutions company Arista Networks (ANET) priced 5.2 million shares at $43, well above the $36 to $40 range. They allow companies to optimize their data centers in the cloud.
On the NASDAQ, Radius Health, which is developing treatments to restore bone density, priced 6.5 million shares at $8, in line with its previously revised range. The company postponed its IPO in May and had planned to offer five million shares at $14 to $16. So they wanted to do a $75 million deal at the midpoint; now they are doing a $52 million deal at that level.
What was the issue? They are not profitable, and biotechs have not performed well.
So one prices above, the other well below after a lengthy delay. What's the takeaway? You had better be in a sector that is hot, and it helps to be profitable.
Finally, WL Ross Holding Corp. (WLRHU) priced 43.5 million shares at $10. This is a "blank check" company formed by Wilber Ross—literally, a blank check company. Ross, a billionaire investor in his own right, can invest in anything he wants to. So why invest in something where you don't even know what the principal is investing in? Because he is Wilbur Ross.
On March 12th, a $210 million IPO for Diamond Shipping (a tanker operator) was postponed. Wilbur Ross, who controlled the company, pulled the deal when he didn't like the pricing.
The Renaissance Capital IPO ETF is showing signs of life, up 5.6 from its low on May 9th. The S&P 500 is up 3.3 percent in that time period.
At that time, over half the IPOs priced this year were trading below their IPO price. Of the 117 IPOs this year, 44 or 37 percent are below their initial price.
--By CNBC's Bob Pisani