Usually, when the Jobs Report comes out with huge positive gains, treasury yields rise, and non-farm payrolls exceed expectations, the stock market goes UP! But not today.

Despite positive news on the economic health of the U.S., both the Dow Jones and S&P were down nearly 1% in mid-day trading. The reason for the strange reversal is simple but counter intuitive: equity markets want things to go badly for a little while so that the Fed will cut interest rates. According to Candice Bangsund of Fiera Capital, domestic markets have now completely priced in a rate cut for July. If that rate cut doesn't happen, the markets suddenly become overpriced and will sell off. So for the next three weeks, good news will continue to be bad news until we hear a consensus from the Fed in late July. 

This reversal has had rippling effects internationally, most notably are:

- the Dollar is up +.57% 

- the Euro is down -.58%

- European stocks (STOXX 600) lost -.72%

- International oil (Brent crude) is up .4%

 In sum, investors care more today about the rate cut than a strong economy. The current market valuation is resting on the upcoming Fed decision.