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%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.