It is the 1st Friday of the month so all of you financial nerds know that means the release of the monthly NFP Report. As we have been saying the consensus leading into the July report was +100k. So what was it…here are the highlights:

• NFP for July were up 163k.
• The June revision was +64k from +80k and the May revision was +87k from +77k so a meaningless net of -6k for the 2 months.
• The jobless rate rose to 8.3% from 8.2%. That is what the headline will say but if you break the number down to the thousandth % it is actually marginally worse increasing from 8.217% in June to 8.254% in July. However look for the Romney camp to jack-up the significance of that increase.
• The private sector job growth was +172k from +73k which is a nice improvement.
• The Labor Force Participation Rate decreased slightly to 63.7% from 63.8%
• Average Hourly Earnings were up .1% which was below expectations
• This is one of the 1st NFP reports that I could remember where it was exactly in-line with the same month ADP report number. At the very least the markets will remember that next month and probably put more credence in the Aug ADP report.

All-in-all this is a good but not great report. However, given the horrendous showings over the last few months this is a much welcomed ray of hope and the stock markets are responding accordingly with the indexes up about 1.25-1.50%. As expected the US Treasury market is down with the 10yr @ 1.54% but that is not too bad when you consider the jubilance in the stock markets. I think the bond markets have it right on this one but it just goes to show what I have been saying which is that the stock markets are just dying for something to give it a reason to rally.

This NFP report is not going to add fuel to the fire that the Fed will go forward with QE3 which is what the bond markets need to get yields lower. However, as we have regularly mentioned it is going to be an elevation in the EU crisis that will prompt a move by the Fed. If you just look at the US financial indicators then a strong argument can be made that the Fed just needs to leave the markets alone. While the economic standing is not great in the US it is far from QE3 worthy which many believe it needs to be to justify more Fed artificial stimulus. If you do not believe me then just ask Ron Paul.

Have a good weekend.