US equity futures were initially disappointed by the great jobs print, but algos quickly BTFD to ensure good news is good news again.

 

However, the market's dovish positioning was unwound with a lower expectation of a rate cut now priced in...

 

Which sparked a bid in the dollar...

And pushed Treasury yield back above the Fed Funds rate..

Interest-rate markets are reacting to strong U.S. jobs number with caution, said George Goncalves, head of Americas fixed income strategy at Nomura Securities.

Bonds “will keep an eye on stocks and although this number is very strong -- and against all of the recent negativity -- the skeptics will discount this as potentially being backward looking,” he said.

Market is looking to Fed Chairman Jerome Powell’s appearance later Friday for further guidance

“This definitely sets the stage for Powell not coming out too dovish,” Goncalves noted by email.

“So markets will not sell-off fully until he speaks - but if he is balanced/less dovish - this sell- off should continue.”

Bloomberg economist Tim Mahedy said:

"This is the strongest employment report of this economic cycle -- hands down."

The big question is - will Powell be able to talk the "good news" hawkishness back down?