Markets were mixed today as a surprise in the Non-Farm Payrolls (NFP) report caused yields to spike higher. The report showed a hotter-than-expected NFP, with 172k jobs added in May, exceeding the 88k expected by economists. This signal strong growth and reinforced optimism about the economy’s resilience. However, the higher floor for yields may also set a higher bar for future rate hikes, with the probability of a September hike currently at over 30%.

The major movers in today’s trading were MegaCap Tech vs Non-Profitable Tech (GSPUMENP Index) and Software vs Semis (GSPUSOSE Index), which both saw gains. However, Bitcoin Sensitive (GSCBBTC1 Index) was weaker, down 11.4%, while Retail Favorites (GSCBHRSB Index) and Most Short (GSCBMSAL Index) also saw declines. Momentum (GSPRHIMO Index) was the weakest performer of the day.

The surprise NFP report has set the stage for increased probability of a September rate hike, with the FOMC currently in blackout period until June 17th. Next week’s Consumer Price Index (CPI) report will be closely watched as it could provide further insight into the economy’s inflationary pressures.

In related news, AI volatility continued to be a theme in today’s trading, with stocks like AVGO, SNDK, MRVL, MU, and ARM seeing weakness following lackluster earnings on Wednesday. These moves are paired with demanding technicals, as the Semiconductor Index (SOX) closed yesterday 75% above its 200-day moving average, the most extended above its 200dma since the ’99-’00 era.

Overall franchise flows are skewed 3.8%, with overall activity levels currently at a 6 out of 10. ETFs as a percentage of the tape are elevated at 32% of the tape, up 5% from 5 days ago. Top of book liquidity is poor relative to average at $8mm, while volumes are ticking higher, +5% from 5 days ago and +12% from 20 days ago.