After Friday's weak data, monetary policy hawks have a little less to crow about.
July's nonfarm payrolls data of 209,000 was below expectations of 230,000 though there were upward revisions in May and June. Meanwhile, hours worked remained unchanged. The result is a perfect combination of a disappointing but not statistically significant number. That should mute any dramatic move in interest rates.
Why is that good? Because there is near-unanimous agreement that the one factor that will force stocks into a correction is a sudden surge in rates. Modest moves up over time, with a slowly improving economy, is different. But if the 10-year yield goes from 2.6 percent to, say, 3.5 percent in a month, forget it—that spells correction.
More importantly, the factor that really matters, wage growth, is up only 2.0 year-over-year. That is below expectations of a 2.2 percent gain; separately, last month was revised down to 1.9 percent from 2.0 percent last month.
The bottom line is there are no wage pressures.That should mute, at least temporarily, any upward pressure on yields.