The Scorecard
What Actually Happened
Yesterday afternoon on Office Hours, with the market up about a percent and barely a downtick in it, Tony Battista put a fair question to Tony Rihan. Even if you had tomorrow’s jobs number in your hand, how would you know which way the market was going to take it?
Rihan didn’t have the number, so he worked backwards from the tape to what it implied. “This rally, that means the Fed is gonna be […] they’re gonna not be hawkish, you know, so that means the job number should be bad.”
Then the two of them went looking for the line. They pulled the consensus up on the screen, fifty-three thousand jobs, and rounded it off. “So if we are less than fifty thousand, maybe there’s something to it.”
The screen said fifty-three thousand on Thursday afternoon. By the time the release landed, the figure quoted against it was fifty-five. Either way, same neighbourhood, and the marker was fifty.
It printed at 162,000.
Three times the estimate. Mohamed El-Erian used the same phrase in his own write-up, “roughly three times the consensus forecast,” and we’ll take the agreement.
The revisions are the bigger story and they’re getting less attention than the headline. A month that was first reported at minus 23,000 is now plus 21,000. That single revision is worth 44,000 jobs, and the net across the two revised months is 55,000 — which happens to be the entire consensus estimate for August, sitting there in the correction to months that are already over. Do the subtraction and the remaining 11,000 sits in the month before.
That matters more than one hot print. A single number three times the estimate can be noise, weather, a seasonal factor, a strike ending. A hot number plus a negative month turning positive is a different labor market than the one everyone thought they had a week ago. It’s also the kind of thing a central bank actually responds to, because it changes the trend and not just the last dot on it.
On composition, from the same Walter Bloomberg post that carried the headline figures: the biggest gains were in food services, up 59,000, and local government education, up 42,000. Liz Ann Sonders put the greatest strength in leisure and hospitality, which is the bucket food services lives in — same fact, one zoom level out. Those two lines are 101,000 of the 162,000. The other 61,000 is spread across everything else. We’re not going to tell you what that means about job quality; we’re telling you where the number came from.
Participation is the part El-Erian flagged and it’s worth a second. His read was that the report was stronger on both sides of the labor market, demand and supply — payrolls went up and so did the number of people showing up to work. The headline participation rate rose to 61.6%, men to 67.2%, women to 56.4%. But the prime-age rate didn’t budge at 83.4%, which puts the increase somewhere other than the 25-to-54 group.
The Part That Doesn’t Resolve
This is the part of the day we can’t tidy up for you, so we won’t try.
The 2-year Treasury yield rose to 4.416%, its highest since January 2025, and traders added to bets on a Fed rate increase this month. Not a cut. A hike.
And the S&P fell a tenth of a percent. The Nasdaq 100 was down eight points on twenty-nine thousand. The VIX went down 1.3%, to 14.14. TLT, the long end, was up 0.43%.
Read that again. A three-times-consensus surprise, revisions that flipped a negative month, the front end of the curve repricing toward tightening, and equity volatility got cheaper.
The one mechanical thing you can say without inventing a story: the front end sold off while the long end was bid. That’s a flattening, and it’s what a market prices when it thinks tighter now means less to do later. It’s a coherent trade. It is not the same thing as saying the market has it right.
What we’re not going to do is turn “the S&P was down a tenth” into a thesis. Sometimes a market absorbs a genuine surprise because positioning was light and there was nobody left to sell. Sometimes it absorbs it for a day and deals with it at the next open, which is Tuesday, because Monday is Labor Day. We’ll find out which.
The Sector Board
Technology on top, energy at the bottom, and a lot of nothing in between. Eight of the eleven sectors are inside seven tenths of a percent of flat.
Energy is the easy one: crude fell 2.3% and Brent 2.0%, so the sector that sells oil went down with it. Financials at −0.7% fits too, once you look at the curve rather than the headline. The front end rose and the long end didn’t. A flatter curve is a narrower gap between what a bank pays for money and what it earns lending it out, and a hot jobs number doesn’t fix that.
But the sector board is lying to you today, and the single names show you how.
Semis Bought It, Mega Caps Sold It
XLK finished the morning up 0.8% with Apple down 1.42% and Microsoft down 1.36%. That only works one way.
Every chip name we follow is green, five of them by two to three and a half percent. Every mega cap we follow is red. The index looks calm because those two cancel each other out.
That’s not a small thing for anyone selling index premium. A flat index built out of a plus-three and a minus-one is a very different market from a flat index where nothing moved, and the second one is what a 14 VIX is priced for.
Bitcoin belongs on the page too. BTC at 79,795, down 2.1%, and IBIT down 2.68%.
Credit Didn’t Blink
Six instruments, and the widest move on the board is two tenths of a percent.
We wrote on Tuesday that high yield had finally moved after five sessions of refusing to, down 0.9% that day. Today it’s flat again. Whatever the front end of the Treasury curve thinks is happening, corporate credit isn’t pricing any of it, and inflation-protected paper didn’t move either.
Credit is the slowest instrument on the board and the one that lies least. When it’s flat, the honest description of the day is that nothing broke.
Rates: The Front End Is The Whole Story
The 2-year at 4.416% is the highest we’ve had to write down since January 2025. Put it next to the rest of the American curve and the shape is the point.
The 1-year sits at 4.148%. So the 2-year is trading 27 basis points above the 1-year, and about 36 below the 10-year at 4.771%. Front-loaded, in other words: the market is pricing the tightening into the next couple of years rather than into next quarter or into the next decade.
One caveat we owe you. We don’t carry Tuesday’s 2-year in our own record, so we can’t tell you how much of that move happened this morning versus over the week. What we have is today’s level and the direction of the bet, and the bet is toward a hike.
The long end barely participated. Against the levels we published on Tuesday, September 1, the 10-year is down about 3 basis points, the 30-year down about 4 and the 5-year down about 2 — three sessions of essentially nothing, with a hot jobs number in the middle of it. The 1-year-to-30-year spread is 108 basis points today against the 112 we printed on Tuesday.
That’s the flattening again, in numbers instead of adjectives.
Global Yields
On Tuesday we pointed out that America was borrowing 59 basis points more expensively than Italy for ten years. Today the gap is 63. It hasn’t gone away and it hasn’t narrowed.
Run the 10-year column against the United States and you get the same picture with more decimal places: 63 basis points over Italy, 100 over Spain, 145 over Germany, 186 over Japan, and 309 over China. Only Britain pays more, at 5.127%, and Britain’s 30-year at 5.759% is still the highest long yield on this board — though it has come in about 12 basis points since Tuesday. Japan’s 30-year has done better than that, down about 22 basis points against what we printed on September 1. Both numbers sit in our own tables if you want to difference them yourself.
China’s 10-year at 1.680% is more than three full points below America’s. That is not a rate cycle. That is a country with a different problem.
Silver fell close to three times what gold did. Gold divided by silver comes out at 68 this morning. Silver is the one that behaves like an industrial metal when it wants to and a monetary one when it doesn’t, and today it picked the first.
Oil giving back 2% takes some of the heat out of Tuesday’s letter, which was written on the day Brent went through $95 on a Gulf escalation. Brent is 1.6% lower than where we printed it on September 1. The war headline hasn’t gone anywhere. The oil price has come off anyway.
GLD, the ETF, was down 0.88% while spot gold was down 1.1%. Different instruments, different clocks, same direction.
South Korea was the worst market on our board on Tuesday at −2.8%. Today it’s the best at +2.4%. Chips will do that.
Emerging markets up 1.2% on a day the American front end priced a hike is the wrong way round from the textbook, and we don’t have an explanation we’d stand behind. It’s on the page because it happened. Four markets are red: India, Britain, Australia and Brazil. Oil down 2% covers two of them, the commodity exporters at the bottom.
The yen is at 155.6350, a tenth of a percent stronger on the day. The bigger number is that we printed 160.22 on Tuesday. That’s a 2.9% move in the yen in three sessions, and almost none of it happened today.
And in Kyiv, a Russian drone attack struck Ukraine’s SBU security service headquarters. Zelenskiy said so; a Reuters witness reported smoke over the centre of the city. No market on this page moved on it.
Trusted Voices
Liz Ann Sonders, Schwab. She had the report broken out before most people had the headline. “August nonfarm payrolls +162k vs. +55k est. & +21k in prior month (rev. up from -23k).” And: “Two-month net revisions to nonfarm payrolls added 55,000 jobs.” On the composition, “greatest strength in leisure & hospitality.” On the supply side, “August labor force participation rate rose to 61.6% […]; rate for men up to 67.2%; rate for women ticked up to 56.4%,” with the “prime age labor force participation rate unchanged at 83.4%.”
Mohamed El-Erian. The cleanest framing of the day, and it’s the one we’ve leaned on above: “The latest US jobs report came in significantly stronger than expected across both sides of the labor market: demand and supply. Specifically: Job Creation: Nonfarm payrolls surged from an upwardly revised 21,000 to 162,000, roughly three times the consensus forecast.”
His post continued past what we could see, so that’s where we stop. We’re not going to finish anyone’s sentence for them.
Charlie Bilello, Creative Planning. Not about America at all, which is why it belongs here today: “Global Central Bank Update: New Zealand hiked rates for the 2nd meeting in a row, 25 bps move up to 2.75%.”
Two hikes in a row, and a cash rate at 2.75%. Set that beside a US 2-year at its highest since January 2025 and traders adding to bets on a hike here, and the useful part is simply this: it isn’t only a US story. One central bank actually hiking and another being priced to isn’t a trend, and we won’t call it one. It is two markets pointed the same direction on the same morning.
What We Did Into It
Yesterday Tony Rihan closed both zebras and the Smart SPY 1-1-1 in Portfolio 1, and Tony Battista took delta out of the QQQ ladder in Portfolio 2. All of it went out before the number, in alerts members already have. The realized total across the three Portfolio 1 closes was $4.00 plus $590.00 plus $442.00, which is $1,036.00, and it ties to the cent against the broker’s realized-today column.
The gold exit looks well timed with hindsight — spot gold is down 1.1% today and silver more than 3%. The SPY zebra is the other half of that coin. It expires today, and SPY opened at 772.52, above both of its strikes.
So let’s be straight about what happened here, because it isn’t a forecast we got right. The reasoning out loud on Thursday pointed at a weak print. The print was three times consensus. Nobody in this shop called that, and the trades came off anyway.
The defensible act was reducing risk ahead of a binary you can’t handicap. That’s a different skill from prediction and a more reliable one. You don’t need to know what the number will be. You need to know that you don’t, and to size accordingly.
Which is where Thursday’s call ended up too. Battista, on why people blow up: “Retail investors fail because they trade too big. They can’t stay in the position to give themselves time to be right.” Not wrong. Too big.
Bottom Line
A labor market that a −23,000 print and a +55,000 estimate had everyone calling soft got revised into something else this morning, and the market’s answer was to sell the front end, buy the long end, and leave equities exactly where they were.
We’d put more weight on the revisions than on the 162,000. A month that printed negative is now positive. The two-month net correction is 55,000 jobs, which is the whole August estimate, arriving as a correction to months already in the books. One hot print is an argument. A hot print plus a rewritten trend is a different economy on paper than the one that was there a week ago, and the 2-year at 4.416% is the instrument that noticed first.
For anyone selling premium, the number to sit with isn’t the payroll figure. It’s 14.14.
That’s what the VIX did on a day the market got a three-times-consensus surprise, watched the front end of the curve reprice toward a hike, and saw its own index composition split wide open between chip names that were green across the board, five of them by two to three and a half percent, and Apple and Microsoft both down around 1.4%. Volatility got cheaper. You are being paid less today than you were yesterday to underwrite a market that just received real news and decided it didn’t care.
We’re not closing anything on that. Nothing gapped and nothing in credit moved more than two tenths. The VIX was 16.35 in Tuesday’s letter and it’s 14.14 now, so this is a market that has spent three sessions getting calmer, not one that woke up cheap this morning. But there’s a difference between a quiet market and a market that has stopped charging for surprise, and the second one is where the expensive lessons live. The tape spent this morning not reacting. That’s the observation. What it means shows up later, and usually not on a Friday.
Disclaimer
This is not investment advice. Nothing in this letter is a recommendation to buy or sell any security. Grow Your Pile and Squared T Capital publish what we do in our own accounts for education. Options involve substantial risk and are not suitable for every investor. A short put can require you to buy stock at the strike price and can lose more than the premium collected. Past results do not predict future results. Do your own work and consider speaking with a licensed advisor about your circumstances.
Past performance is not indicative of future results, and results shown are those of our own accounts and are not representative of any subscriber’s results. Read the Characteristics and Risks of Standardized Options before trading.
Tony Rihan and Tony Battista Grow Your Pile
Every options trade in all three portfolios is published, win or lose, with entry, exit and running P&L at growyourpile.com.