Ivelin Stankov’s Post

The US 10-year Treasury note yield fell below the 4.3% threshold, extending the sharp drop from the one-month high of 4.47% touched on July 1st as the latest jobs report supported the view that the Fed will commence its cutting cycle in September. Non-farm payrolls rose more than expected in June, but aggressive downward revisions to payroll counts from April and May added to recent evidence that the US labor market is softening. The jobs report also showed that wage growth slowed to a three-year low and that the official unemployment rate unexpectedly rose to 4.1%. On top of that, earlier data showed that continuing unemployment claims rose for a ninth week to its highest since 2021, underscoring the difficulty of finding new employment. Nearly 75% of the market has positioned for the Fed to deliver a rate cut in September, while over 70% expects more than one rate cut this year.

A very strong US payrolls report for September has brought global rate cut expectations back to Earth. The headline jobs number at 254k v 140k expected, coupled with upward revisions to the previous 2 months saw US Treasury yields rebound strongly from recent lows. An unexpected drop in the unemployment rate to 4.1% (4.05% unrounded) and a strong reading on wages has dispelled any fears of a hard landing for the US economy and put to bed any thoughts of another 50bp rate cut at the November 6th Fed meeting. The recent spike in oil prices, on foot of the worrying escalation in the Middle Eat, as well at the port workers strike on the US East coast has raised fears of a rebound in inflation and helped to put upward pressure on the front end of the yield curve. While today’s report was US specific, the ripple effects are likely to be felt across major rates markets, especially where rate cut expectations had reached overstretched levels recently. The USD saw broad gains, with the Euro now back below 1.10 for the first time in 2 months. Equity markets, as they so often do, saw the positives in today’s report so while borrowing costs seem unlikely to fall as quickly, the employment landscape should sustain strong levels of consumption which will support earnings. Of course all this comes at a great time for the Democrats and will be bad news for Trump! A strong economy, full employment, inflation back under control, falling cost of credit and strong asset prices. #Jobs #Economy #Fed #Rates

*Labor Markets In Transition* Businesses are still adding to payrolls but not as indiscriminately. Shortly after this release, markets were pricing in a slightly higher chance of a 50 basis point cut at the next Fed meeting compared to yesterday’s pricing. However, our view is the Fed will likely cut by 25 basis points and reserve the right to be more aggressive in the last two meetings of the year. Expect volatility like we are seeing today in 10-year yields as investors adjust expectations.  Key Takeaways: *August payrolls were buoyed by the construction and health care sectors. The unemployment rate fell slightly to 4.2%.  *July’s estimate was revised down to 89,000 and is indicative of growing hesitation for business to hire at the same pace as earlier this year.  *The number of individuals working part time for economic reasons was 4.8 million in August, up 600,000 from last year and higher than the pre-pandemic average.  *Multiple job holders as a percent of employed individuals were unchanged at 5.3%, matching the pre-COVID-19 high.  *Temp help workers continue to fall, a sign of weakness in the job market. LPL Financial LPL Financial - Research 

Controversial signals from the US labour market confuses investors 🤷♂️ The US economy added 275K new jobs in February, beating analysts expectations of 200K.👊However, the unemployment rate ticked up to 3.9%, offsetting the payroll effect.🤔 🧐Interestingly, last month’s 353K jobs have been revised down to 229K, an enormous downward revision. Taken together with January’s revision, the 2024’s net payroll revision equates to -167K, suggesting that the labour market in the US is not as hot as it looks on the surface.🌤️ Hourly earnings remained steady at 0.1% MoM and 4.3% YoY but even so this is still a level that is not consistent with the Fed’s 2% inflation target. Market consensus for first interest rate cut is still for June with a probability of ~70%. Mixed. #nonfarmpayrolls #economic #data #us #labourmarket #inflation #interestrates #investing #markets

𝗨𝗦 𝗹𝗮𝗯𝗼𝘂𝗿 𝗺𝗮𝗿𝗸𝗲𝘁 𝘀𝗵𝗼𝘄𝘀 𝗮 𝘀𝗶𝗴𝗻 𝗼𝗳 𝘄𝗲𝗮𝗸𝗲𝗻𝗶𝗻𝗴 📊The US economy added 206K new jobs last month, the latest nonfarm payroll report showed. Although slightly higher than the 191K forecasted, the reading was below last month’s figure of 206K. More importantly, the unemployment rate ticked up to 4.1%..🔺The reading surpassed analysts’ expectation of no change at 4%, indicating that higher rates are starting to have more significant impact on the labour market..⚠️ Today’s data comes just 2 days after Fed minutes indicated that the FOMC has become more attentive to downside risks in unemployment..🧐 The strength of the labour market since the start of the hiking cycle has given the Fed the time to take a cautious approach to lowering rates but will these increasing levels of unemployment force the Fed to cut earlier than December? Comment below.👇 #us #labour #market #data #nonfarm #payrolls #interestrates #inflation #investing #markets

After all that anticipation the August payrolls report wasn’t as definitive as many were hoping in determining whether the US Fed starts its rate cutting cycle with 25bps or 50bps on the 18th. Coming in at +142k for the month, it was below the consensus pick of +160k but higher than the likely weather affected and downward revised +89k in July. So, neither worryingly strong nor panic-inducingly weak. Wage growth came in a bit higher than expected and the unemployment rate ticked 0.1 percentage point lower to 4.2%, as was expected given the 0.2 pp rise last month. For us the bottom line remains the same: the US economy is not in recession, but it is slowing. Expect a 25bp cut on the 18th.

The US has generated strong growth! According to data from the Labour Department, unemployment fell by 10 bps to 3.8% in March as non-farm payrolls increased by 303,000 in March, significantly higher than all economic estimates. Government, healthcare, and construction sectors accounted for the highest growth as the job growth has remained robust despite the multi-decadal high interest rates. Moreover, hourly rates grew 4.1% YoY. However, this strong labour market might not be the best for capital markets. With jobs data coming in hotter than expected, investors are considering that the Fed might not announce three rate cuts this year! Some expect the rate cuts to be delayed and the number of rate cuts to fall from three to two! In fact, Minneapolis Fed President Neel Kashkari recently took a more hawkish stance, stating that rate cuts might not be needed if inflation continued to stall! Follow ProCapitas for more financial insights. #us #jobs #economy #fed #usa #finance #financialinsights

The US unemployment rate rose to 4.3%, surpassing expectations of 4.1%, and Non-Farm Payrolls were weaker than anticipated at +114K compared to forecasts of +175K. The disappointing labor data, combined with weaker manufacturing data and the highest jobless claim reading in 11 months, triggered a sharp decline in US yields. Ten-year US Treasury yields fell by 11 basis points (bps) to 3.85%, and the policy-sensitive two-year rate declined 18 bps to 3.96%. Weaker US data raised concerns about whether the Federal Reserve should have already initiated rate cuts. (Markets are pricing in four 25 bps cuts in 2024)

"Wow." That's how we all reacted to the January jobs report. It was another surprise- payrolls were up 353,000 last month, blowing past all economist forecasts. And revisions to prior months added more than 100,000. As you look through the report, the good news piles up: wages skyrocketed, nearly all sectors added jobs, the participation rate for prime-age workers was up, unemployment rate remains near a historic low...this doesn't look like a slowing economy and far from one headed for a recession. Market futures immediately fell and bets for a May rate cut were pushed to June- just a few weeks ago investors thought the Fed would start cutting in March. Labor strength means consumer spending strength means well-supported economic growth- great to Americans but throws a bit of a wrench into the Fed's hopes for weakening inflation pressures. https://lnkd.in/e-JTZbUu

The U.S. economy again added slightly more jobs than expected in June though the unemployment rate increased, the Labor Department reported Friday. Nonfarm payrolls increased by 206,000 for the month, better than the 200,000 Dow Jones forecast though less than the downwardly revised gain of 218,000 in May. Meanwhile, the unemployment rate unexpectedly climbed to 4.1%, providing a conflicting sign for Federal Reserve officials weighing their next move on monetary policy. The forecast had been for the jobless rate to hold steady at 4%. “It’s a soft landing kind of report,” said Jan Hatzius, chief economist at Goldman Sachs. “This does support the idea that [the Fed] will cut relatively soon, and we continue to think September is the most likely.” Read more: cnb.cx/3zvFEt0