工资不📈，通胀难📈。The disappointing payrolls report highlights how sluggish the economic recovery may be, which indicates to us that the market may be too optimistic that inflation will climb over 2% for the longer term. As we noted previously, Treasury Inflation-Protected Securities (TIPS) inflation breakevens have been following goods prices, while core service prices are growing much slower and will take time to rebound. Wages and salary disbursements have rebounded, which suggests core inflation may climb a bit further, but the payroll data might mean the pace of wage growth could slow. The positives out of the payroll report are that hourly income and hours were both up, which helped to increase aggregate labor income at a good pace, even without strong job gains. This suggests a delay, not an end, to the Fed's plans.