We are adjusting our call. This was a strong jobs report, and it makes clear that there’s more work to be done. However, the tightening in financial conditions we’ve seen—before and after this report—constitutes a lot of new restraint. The market has raised the probability that there will be another rate hike to about 50%, and it’s raised the probability of a November hike to about a one-in-three chance. Critically, the entire Treasury yield curve shifted up further after this news.
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