July's super-strong jobs report eliminates some concerns about the health of the economy and labor market, but it is not viewed as enough of a catalyst to get the Fed moving on rate hikes by September.
Yet, traders and economists are now focused on the Aug. 26 speech by Fed Chair Janet Yellen to get a real read on the Fed's thinking. Yellen will be speaking at the Fed's annual symposium in Jackson Hole, Wyoming. where Fed chairs have been known to deliver important policy messages.
As for the jobs report, it soothed concerns that hiring was ebbing. There were 255,000 payrolls created in July, with 217,000 of them from the private sector. Economists had expected just 180,000 and the 75,000 additional workers were split between government hires and those of the private sector. The unemployment rate held steady at 4.9 percent.
Stocks opened with strong gains, Treasury yields and the dollar reversed losses. The two-year yield jumped to 0.70 percent, from around 0.62 percent earlier in the day. The 10-year yield touched a key technical area of 1.54 percent.
"It's better. We're getting a little knee-jerk reaction. We'll see if that persists," said John Briggs, head of strategy at RBS. He said RBS' priority reading of market expectations shows the odds for a September rate hike moved to 30 percent and December odds moved to 54 percent from 42 percent before the number.