We were looking for some sort of validation from today’s Unemployment and Jobs Numbers Report about the state of the economy and it looks like we got some. Just in the other direction. 

Recent economic reports indicated a potential slowdown in the economy as GDP growth has been tepid at best so far this year. The June non-farm payroll jobs numbers came in at 292,000, a respectable amount that some thought might have been something more akin to an accounting error, given that there were only 24,000 new jobs created the month before. For July however, the June numbers were backed up. According to the Labor Department, while the headline unemployment number held steady at 4.9 percent, there were 255,000 new jobs created in the month of July. Not bad. Wages also moved higher at a 2.6 percent year over year clip.

Now for those who were looking for a slowdown for the second half of 2016 they might not see it come to fruition after all. Wall Street liked the news as the Dow rallied for triple digit gains and the S&P 500 hit a new intraday high. These two back to back jobs reports indicate hiring is back and employers are increasing production. If this holds true the Q3 GDP number should be a bit more respectable than what we’ve seen so far in 2016.

Now the chatter will be about the Fed and if in fact a rate increase will happen before the end of the year, something many thought wouldn’t happen at least well into 2017. It appears the June job creation was real after all and not an accounting trick and you can expect analysts to keep a close eye on weekly unemployment claims. If those numbers remain low, it’s very possible rates will begin to rise and bond yields fall very soon.