Weekly Market Commentary 06/10/2016

As is customary following the all-important monthly jobs report, the data calendar turns skimpy for a week or so. The dearth of new information, of course, simply gives pundits more time to process the significance of the May jobs report, particularly if the latter defied expectations. Needless to say it did in spades, coming in considerably weaker than just about anyone anticipated. And not surprisingly, market perceptions regarding Fed policy and the economic outlook have shifted accordingly. Both have been scaled back, with the odds of a Fed rate hike at the upcoming June 14-15 policy meeting now put at less than 5% compared to 20% prior to the report. The odds of a move at the July 26-27 meeting have also been downgraded, albeit
it remains at a nontrivial 30%. We think the chances are somewhat higher, but recognize that more downbeat data before the meeting could well cause a delay until September.