This confirms hopes that the U.S. recovery is on track but it also re-ignites market speculation that the Federal Reserve will opt for a rate hike sooner, rather than later.
European bond yields, already volatile due to a combination of low liquidity and higher-than-expected inflation for the eurozone for May, increased after the data, with Bund yields trading around eight basis points higher at 0.9%, French yields at 1.2%, Italian bonds at 2.2% and Spanish bonds at nearly 2.2%.
The 10-year U.S. Treasury yield recently rose by 11.3 basis points at 2.42%. European stocks were little changed, with the U.K's FTSE recently down 0.8% and France's CAC and Germany's DAX down 1.55%.
A Fed rate hike looks increasingly likely, but by contrast the European Central Bank will keep purchasing bonds at the pace it promised or will even increase its quantitative easing to ensure a sustained recovery in the single currency area.
Therefore, investors should maintain exposure to eurozone stocks, which had the best earnings in a long time in the first quarter. Capital flows over the past few weeks have shown investors shifting out of the U.S. into European stocks and bonds.
Recent data in Europe showed Italy, Spain and France were on the mend, with job creation in these countries faster than in Germany's, so it looks like Italian, Spanish and French companies will benefit substantially from ECB QE.