Daily Market Color December 2, 2016Payroll Friday Yields Mixed Data, Treasurys Rally Back Treasurys Rise After Mixed Labor Data The US jobs report released today displayed a solid 178,000 increase of nonfarm payrolls for the month of November. The figure fell just below expectations of a 180,000 gain, but demonstrated a noticeable rebound from the previous month’s revised level of 142,000. Initially projected to hold steady at 4.9%, the unemployment rate unexpectedly fell to 4.6%, its lowest reading in over nine years. While the headline figure presents a positive sign for the labor market, the largest driver behind the change was more closely tied to a dip in the participation rate rather than growth in employment. Other data in today’s release was a bit less positive, as average hourly earnings fell 0.1% MoM, well below consensus of a 0.2% rise. The monthly movement represented the first decline in two years, and shifted the year-on-year delta to 2.5%. With today’s report casting some doubt on the surging post-election growth outlook, the market will be placing increased importance on future economic data and Fed commentary to gauge the likely future rate hike path. Bonds rallied following the release of the payroll data, recovering a portion of the losses suffered from the previous two-day selloff. Treasurys yields declined by 4-7 bps across the curve, pushing the yield on the 10-year note below 2.40% after yesterday’s rise to 1.5-year highs. Gold prices similarly rebounded, posting gains for the first time in four days while oil prices built off their recent momentum and traded up 0.5% to 1%. Equity prices were range-bound throughout the day, with all three major stock indices trading within a +/- 0.25% range. Another European Referendum European investors remained conservative to end the week with Italy’s constitutional referendum scheduled for this Sunday. Current polls reveal a “no” vote being the likely outcome, which would result in a rejection of existing Prime Minister Matteo Renzi’s proposed legislative changes, and ultimately lead to his resigning from office. Renzi’s proposal being considered would shift rule-making power away from the Senate in an effort to make the government more efficient in creating and establishing new laws. If approved, the vote will strike the tenure of the 315 existing senators and appoint 100 new local government figures. The opposing side, led by a populist party called the Five-Star Movement, seeks to rid Renzi of power with the goal to call an early election, vote a member of its party into office, and eventually establish Italy’s independence from the European Union. Given the recent rise of populism in the U.K. and American referendums, this weekend’s vote will capture the attention of markets worldwide as the future direction of Italy’s government hangs in the balance. Have a great weekend.