Update (1135ET): Bonds and stocks extended gains after the weaker than expected ISM Services data building on the weak wage growth data in the BLS report. However, while short-dated yields are extending their collapse (2Y Yields -25bps post-Payrolls), the S&P has stalled at critical resistance.

The 2y Yield just crashed...

As rate-hike odds plunge...

Stocks soared but have stalled at around 3900 (S&P)...

As SpotGamma notes, a breakout of 3900 is really needed to lift and extend any gains into something sustainable (3850-3860 remains a key pivot region)...

However, SpotGamma notes that as we are now nearing the heavily-watched 1/12 CPI number, the rally scenario is likely on hold until then.

We would imagine Mr.Powell and his pals are displeased by this "unwarranted" easing.

*  *  *

Forget the good news in the jobs report - record unemployment and underemployment rates - let's focus on the weakness in wage growth (all thank to revisions)...

Revisions to average hourly earnings data paint a marginally less worrisome picture for the Fed on wages than the Nov report

The upturn in wage growth in Nov (originally reported as +0.6%) was revised (to +0.4%)

The 4.6% annual wage growth in Dec was the lowest since Aug '21 pic.twitter.com/1lCjoDjcMe

— Nick Timiraos (@NickTimiraos) January 6, 2023

And that 'bad' news is just what stocks wanted...

Bond yields plunged led by the short-end...

Gold also spiked, back above $1850...

And the dollar was dumped...

And most importantly, Fed rate trajectory expectations shifted dovishly lower (lower terminal rate and more rate-cuts)...

These easing financial conditions are not what The Fed wants to see.