A BIG MISS ON THE JOB’S DATA

Wow!  What a miss in the jobs data.  Both non-farm payrolls and private sector job creation vastly disappointed.

One would expect the bond market to surge on the data but long dated Treasuries sold off with the 30-year off 1 ¼ points and the 10-year is off about 3/8 point.  The Treasury curve between the 2 year and 30 year has gapped over 5 basis points, a significant uptick.

What gives?   Some have immediately stated this increases the odds of more stimulus.

Others have stated it is all about the lack of supply given the outsized gains in wages.  Wage growth was twice as strong as anticipated and year over year increases in wages is the greatest since the late 1970s according to Bloomberg.

The labor participation rate (LPR) remained unchanged at 61.7%.  Are workers not returning to the workforce?  Has there been a systemic and psychological change in the American worker because of fiscal policy?

Speaking of which, since the pandemic commenced, approximately $794B in unemployment benefits have been distributed.  Approximately 25% of workers or 46.2 million people have received at least one week of unemployment benefits since March 2020.

Unemployment benefits distributed in 2009, the year which unemployment peaked during the Great Recession totaled $128 billion.  Back in 2009, only 14.5M Americans collected at least one benefit payment, which was less than a third of the pandemic annual total.

Tomorrow the JOLTs data is released.  Analysts are expecting job openings are expected to 10 million, slightly lower than the previous month’s record of 10.073 million.  This data point is in direct contradiction to the massive miss in August’s job creation.

To write the obvious, the data generates more questions than answers.

Last night the foreign markets were mixed.  London was down 0.25%, Paris down 0.03% and Frankfurt down 0.23%.  China was 1.51%, Japan up 0.86% and Hang Seng up 0.73%.

The Dow should open flat ahead of stronger than expected Chinese manufacturing data and growing belief that the ECB would soon begin curtailing bond purchases.  The 10-year is off 12/32 to yield 1.37%.

 

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