GOOD MORNING! Thursday was another whack-a-mole day for the markets Initial claims for unemployment benefits higher than expected for the second consecutive weeks, in conjunction with Wednesday’s weak ADP Private Employment Change Report sent Treasury yields and stocks lower on concerns about fast-cooling labor market. But headline roulette landed the ball on the right number that had the markets reverse course and sending yields and stocks higher. The initial reversal came after the European Central Bank cut rates as expected. But it also indicated that it may not do so again. That had yields on European bonds moving higher with Treasuries in tow. Treasury yields continued to edge higher after it was announced that President Trump and China’s President Xi Jinping talked on the phone and agreed to start a new round of trade talks as soon as possible The higher market rates eventually wore down stocks. The benchmark equity indexes ended the session with modest losses. One day after sharp gains, gold was whacked lower.

     Ahead of the much anticipated May employment report, stock index futures are higher and Treasury yields are lower. The markets believe the report will show further cooling of the labor market and will boost the argument for the Fed to cut rates sooner or more than previously priced. Currently, the fed funds futures are priced for 54 basis points worth of easing this year. Based on Bloomberg’s survey, non-farm payrolls will show an increase of 126k last month after rising 177k in April. The survey also shows the expectation for the unemployment rate to stay steady at 4.2%. To be sure, there are downside risks to this report based on the weak ADP Private Employment Change Report, a slight shift up in initial claims for unemployment benefits and the gossip in the Fed’s Beige Book. If so, expect volatility as those that live under rocks come to the surface.