What will today’s jobs data suggest? Following yesterday’s release of weekly jobless claims, which are volatile on a weekly basis, the markets are now anticipating the Fed will lower rates as soon as September, versus October while continuing to fully price in at least one additional cut by year’s end.
As widely noted, monetary policy expectations have vacillated greatly throughout the year with expected cuts ranging from one to three based upon the data that is released.
Analysts are expecting a 125k and 150k increase in nonfarm and private sector payrolls, respectively, a 4.2% unemployment rate, a 62.6% labor participation rate, a 0.3% increase in average hourly earnings and a 34.3-hour work week.
This week the Treasury market has had an outsized reaction to lower-than-expected economic data (ISM Services Index and ADP Private Sector Employment Survey), a hallmark of the lack of liquidity and conviction.
Speaking of which, Treasury yields did climb yesterday as a selloff in European government bonds following the ECB remarks that it may not again lower interest rates following its widely anticipated rate cut.
Bond momentum was also sapped after reports that Chinese/American trade talks between Xi Jinping and Trump were productive with further talks scheduled, resulting in “very positive conclusions for both countries.”
Equites were mixed. TSLA dragged the NASDAQ lower about 1.0% as the apparent feud between the President and Elon Musk escalated. The Dow was relatively unchanged.
Last night the foreign markets were down. London was down 0.03%, Paris down 0.05%, and Frankfurt down 0.22%. China was up 0.04%, Japan up 0.50%, and Hang Seng down 0.48%.
Futures are up 0.30% but this could change radically given the significance of the 8:30 data. A Bloomberg headline read “Futures are up on easing of Trump-Musk Rift” further stating the “extraordinary spat” between President Trump and Elon Musk may cool. Is this headline only click bait or something of significance?
The 10-year is off 3/32 to yield 4.39%.
