‘Sizzling’ US Jobs Data (+528k) Make Case for Bigger Fed Rate Increases (Real Avg Hourly Earnings Growth Sinks To -3.8173 And US Treasury Yield Curve Inverts Further To -37.6, Most Inverted Since 2000) – Confounded Interest – Anthony B. Sanders

The media is thrilled with today’s jobs report showing a sizzling 528k jobs added to the US economy. And with that, the media is cheering that recession fears are shrinking.

But hold on a second.

First, while 528k jobs were added in July (great news!), REAL average hourly earnings growth YoY fell to -3.8173. Why? Because the rate of inflation is greater than nominal average hourly earnings YoY of 5.2%. That is BAD.

And the “sizzling” jobs report isn’t feeling any love in the bond market where the US Treasury yield curve (10Y-2Y) deepened its inversion to -37.593 basis points, a drop of -1.331 BPS. Note that the 10Y-2Y curve falls below 0% just prior to every recession.

Labor force participation actually fell to 62.1% from 62.2% in June.

I am assuming that The Fed will misread the jobs report and argue for LESS COWBELL.