Was The Jobs Report Real and What Are The Lasting Implications?

Is Friday's NFP number of 353k versus a 180k forecast "real?" Or is it some distortion created by the annual benchmark revision process?  Yes and no.  Smart, credible market participants don't even entertain the notion of intentional manipulation. That said, they're well aware of unavoidable distortions, and today's payroll count qualifies.  That's not to say the job gains weren't "real," but NFP overstated the resilience of the labor market.  That's why yields are still much lower than they were last week.  Why are they so much higher than yesterday, then?  Partly because yesterday capped an aggressive snowball rally that was built on a shaky foundation.  The only truly solid foundation will be a sustained return to 2% inflation, and the only thing that would predispose traders to believe in that return any faster would be an obvious deterioration in the data.  At the very least, today's jobs report is anything but a deterioration.