Equity markets were mixed at the close amid jobs data that missed expectations. 

Technology shares led the gainers, likely a risk-off move as investors look for growth amid a spreading Delta variant. 

European and Asian equities are mixed as Japan’s Prime Minister Suga announced he will not re-enter the party’s leadership race.

U.S. 10-year yields are slightly higher amid the jobs data. 

Payroll growth data fell well short of expectations, coming in at only 235,000 jobs added in August versus 720,000 expected, with the unemployment rate falling from 5.4 percent to 5.2 percent. 

The news comes as the Delta variant continues to spread, with hospitalizations in low-vaccinated regions growing.

The release puts August as having the slowest growth since January, and, notably, hospitality and leisure saw a rise in unemployment, a sector  that has driven past job gains.

Investors are likely evaluating whether the latest jobs report will throw a kink into the Fed’s tapering schedule, which many analysts forecast will start sometime this year. 

Even though job growth has been sluggish and employment levels remain well below the pre-pandemic highs, inflation has seen a recent surge due to bottlenecks and supply-chain disruptions. 

The Federal Reserve has allowed inflation to run hot amid the message of “transitory” factors. 

However, various investors are trying to gauge how long the Fed will allow inflation to run hot. 

High inflation and low employment gains put the Fed in an awkward position between its two mandates: 1) maintaining maximum employment, and 2) maintaining stable prices.

In our view, equity-market volatility is likely as the Delta variant, the pace of inflation, and the rate of employment gains evolve, with the market likely to recalibrate to incoming data. 

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