Did Goldilocks find the right bed with the July Labor Department’s strong jobs report?
A Deeper Dive Into Jobs Report
The July nonfarm payrolls added 943,000, above analyst estimate and higher than the 850,000 in June, according to Briefing.com. The unemployment rate came in at 5.4%, better than the expected 5.7% and hourly wages were up 0.4%.
Drilling down, industries that added the most jobs included leisure and hospitality, which increased by 380,000 jobs. Two-thirds of those job gains were in food services and drinking places, accounting for 253,000 jobs. However, despite this recent growth, employment in leisure and hospitality is down by 1.7 million, or 10.3 percent, from its level in February 2020. Health care added 37,000 jobs in July.
Employment in manufacturing increased by 27,000 in July, largely in durable goods. But again, manufacturing employment is 433,000 below its February 2020 level, or before the pandemic took hold. Construction jobs, a key indicator of economic activity, didn’t change much. Health Care added 37,000, which is good to see given that this industry was severely impacted by the pandemic.
In the education space, employment rose by 221,000 in local government education and 40,000 in private education. Usually, we’d see a sizable drop in the education component but this time it may be different because of the seasonal adjustment we see at the end of the school year. Keep in mind, schools are gearing up for the new school year so this could only last a month or so.
Equity futures picked up a bit after the release but didn’t react too much. However, the 10-year Treasury yield did jump up to the 1.28 level.
Beyond The Jobs Report
The theme on Thursday was risk on trades—investors are willing to accept risk and be long stocks, and not stay with the safety of Treasuries. The expected earnings growth rate for S&P 500 companies is tracking toward 85.1%, which would be the biggest jump since the fourth quarter of 2009, according to FactSet.
The bond yield curves continued to get squished, flattening again on Thursday. The 10-year yield briefly reached the lowest level in six months at under 1.13% but settled back to 1.20. There have been pockets of vocal concerns that a hawkish Fed may want to take action if the jobs report showed growth deemed so strong that it stoked inflation fears. However, the Fed has reiterated multiple times that it intends to keep rates steady until 2023.
The Cboe Volatility Index (VIX), dialed back to below 17 today, ahead of the open.
Stay Tuned
Investors are likely to be closely watching the progress of the bipartisan infrastructure bill, which is still being debated. Will the bill get through the chamber prior to the recess that’s scheduled to start on Monday? The infrastructure package could impact yields so a lot depends on how things go. This may be something to keep an eye on over the weekend.
One thing to consider: A ramp-up in EV production could mean government support. The infrastructure bill that’s being debated includes funding for these charging points. One more reason to stay tuned to how the infrastructure bill progresses. But a word of caution: these companies aren’t currently profitable, so investing in them is not only risky, but also could require some patience.
It Took 5,000 Years for Interest Rates to Get This Low: The Federal Reserve has been keeping interest rates just above zero for months. Based on the buzz surrounding it, you’re probably wondering what this means in the larger scheme of things. Well, it’s arguably a big deal from a historical perspective.
TD Ameritrade® commentary for educational purposes only. Member SIPC.
© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
To add Benzinga News as your preferred source on Google, click here.
