Stocks rallied after last week's jobs report came in weak. Traders read soft hiring as a reason the Fed would back off any talk of raising rates. Look at what futures markets are actually pricing, and the relief looks more like a postponement than a cancellation.

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Former Hedge Fund Manager

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A Weak Report Bought Some Breathing Room

The June jobs report showed employers added just 57,000 positions, well short of the 100,000 economists expected, while unemployment held at 4.2%. Markets took that as a signal the economy is cooling enough that the Fed won't need to raise rates anytime soon. Odds of a hike at the Fed's September meeting came off the table entirely in the days after the report, according to the CME FedWatch tool. That's the part that made headlines and pushed stocks higher.

The Hike Didn't Disappear, It Moved

Here's the detail that got less attention. CME FedWatch data still shows roughly a 42% chance of a quarter point hike by the end of this year, versus only about a 22% chance rates stay exactly where they are. The September meeting came off the table, but October is still very much in play. A single soft jobs report bought the market a reprieve on timing. It did not convince traders that a hike this year is off the menu.

Gold Is Treating This as Temporary Relief, Not a Reversal

Gold climbed to around $4,170 an ounce, its best week in a month, snapping four straight weekly declines as hike fears eased. That's a real move, but it's worth noticing gold rallied on reduced near-term hike odds, not on any actual rate cut. If softer job growth continues and pulls the hike further off the table, gold likely keeps responding. If the data firms up again, this bounce could unwind just as fast as it appeared.

Final Take

A weak jobs report is not the same thing as the Fed deciding inflation is beaten. Right now the most likely single outcome by CME's own numbers is still a rate hike sometime this year, just later than September. If you've been waiting for borrowing costs to ease on a mortgage, a car loan, or a credit card balance, one soft month of hiring bought time, not a guarantee. The next jobs report, and the one after that, will decide whether this pause holds or whether the hike conversation comes right back.

The IPO was the distraction. What comes next is what moves the money (presented by Omnia Research)

Its CEO is projecting 8,000% growth (presented by Brownstone Research)

Written by Deniss Slinkins
Millionaire Core