Treasuries have posted their longest slide since April, the dollar rose and stocks fell on speculation that today’s jobs data will boost the odds of interest rate hike later this year.  The spread between comparable Treasuries to that of similar maturity German or UK debt is the highest in at least a decade according to Bloomberg.

The cause for yesterday’s continuing selloff in Treasuries was initial jobless benefits that fell to the lowest level since 1973.  Jobless claims have now been below 300,000 for 83 consecutive weeks, the longest stretch since 1970 according to the BLS>  Oil also climbed above $50 barrel for the first time since June as inventories are continuing to decline, down by 25 million barrels in September versus an expected increase of over 30 million barrels according to the IEA.

The markets are fast adding to bets that the Fed will raise interest rates before year end, perhaps as earlier as November.  Currently Fed Funds Futures are suggesting a 73% chance by December and 24% in November.

How will these odds change with the release of September’s jobs data?  Consensus is expecting a 4.9% unemployment rate, a 172k and 170k increase in nonfarm and private sector payrolls, respectively, a 0.3% increase in average hourly earnings and a 34.4 workweek.  A 62.8% labor participation rate (LPR) is expected.

Last night the foreign markets were down.  London was up 0.90%, Paris down 0.44% and Frankfurt down 0.46%.  China was up 0.49%,  Japan down 0.23% and Hang Sang down 0.42%.

The Dow should open nominally lower ahead of the jobs data but the direction can change significantly given the perceived importance of this data point.  The 10-year is off 2/32 to yield 1.75%.


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.
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