September Payrolls Came In at 29,000 and Futures Gapped Up

September payrolls came in at 29,000. Forecasts ran from 84,000 to 90,000, unemployment ticked up to 4.2%, and July and August were cut by a combined 60,000, which leaves July negative. Wages rose 0.1%. Futures went up on it, WTI is back under $90, and yields are lower with the 10-year still near 5.2%. SPX closed 7,666.45 Thursday, up 0.2% after a low at 7,617. Premarket 7,730.

Warsh's case for tightening leaned on a labor market he called effectively at full employment, and this report takes most of that away. The 162,000 August print that seemed to prove him right in early September is now 133,000, and the last three months average about 51,000. The other half moved the opposite way only yesterday, when ISM prices paid jumped to 77.9 against 72.3 expected. So the Fed gets softer jobs and hotter pipeline prices inside 24 hours, two weeks after hiking and with October already priced as less likely than not. A weak print is easy for stocks to buy this morning. It's harder for a committee that just told everyone inflation is too high.

The gap clears the level that capped Monday and Wednesday, prior demand at 7,725, and opens on the nodes just above it. The profile flipped positive overnight, roughly two to one, with positive gamma at every strike from the flip at 7,675 up to the call wall at 7,750, so this move has a cushion under it, which Thursday's even negative slope never had. The wall is the biggest node on the day and prior demand sits right on it. Past it the gamma keeps going but thins quickly, and the next real size is 7,800, at the record close.

The lean is long, just not at the open. Monday through Wednesday each closed 29 to 38 points under where it opened, and a jobs gap is the easiest open there is to sell. The buy is 7,713, prior demand over the 7,700 block, for 7,725 and 7,746 under the wall. A close under 7,698 ends it and puts the flip back in play.