Nonfarm payrolls created some excitement in the market, increasing a more-than-expected 288,000 in June and with the unemployment rate falling to 6.1 percent. Gains were broad-based including the long depressed government sector. Revisions were also upbeat with April and May increasing on net by 29,000 jobs.

The recent string of labor market improvement will put the Fed in the hot seat, but slack was still evident in nonfarm payroll report. It is important to note that average hourly earnings slipped to 2.0 percent over the past year, which is still well below the long-run average, while labor participation rate remains at a 36-year low. Without much needed improvement in wage to increase effective demand, US economy growth will remain relatively soft.