The following commentary was posted at Gillespie Research

Summary

Two days a quarter do not make! But weak bond and stock closes today could signal that something is indeed in the process of change, and not for the better, either.

I plan on getting a good deal of update material out during next week. In the meantime, here is something to ponder over the long weekend.

Today's immediate reactions to the weaker-than-expected employment numbers were a sell-off in stocks and a sharp rally in bonds. In the case of stocks, I suspect it was the right reaction but probably for the wrong reasons. As to the bond market, I suspect it was simply the wrong reaction, although there are some strong technical forces that contributed to the initial rally.

There's still plenty of time left in the trading day for stocks to rally, so I'm not going to draw any conclusions about July commencing with two back-to-back down days. But were today's close to be a weak, negative one, it very well might be signaling an important change in direction.

As for long Treasuries, I expect them to finish today well off their price highs, yield lows.

What I suspect may be just ahead of the debt and equity markets is not only getting a stronger whiff of stagflation, but also beginning to react to it. I'll discuss this in greater detail soon, but I will state here that if stagflation is the direction in which we are heading, as I believe it is, it surely is not be bullish for either market.