Pssst. Some People Think NFP Could be Even Weaker Than Forecast
Thu, Aug 31 2023, 4:35 PM
This morning’s economic data came out slightly stronger than expected, on balance, and bonds rallied anyway. Granted, Core PCE inflation was 0.2 vs 0.2, but excluding housing, core PCE was higher for the 2nd straight month and the annual tally remains way too high and very flat. Add the lower jobless claims number (and the beat in Chicago PMI if you want) and the most logical reaction would have been to sell. In the market’s defense, shorter term rates DID sell, but not too much. One is forced to conclude that month-end trading distorted the day OR that there’s a fair amount of belief in the whisper number on NFP being lower than forecast due to labor strikes. We’d emphasize that such whisper numbers do not matter in a world where NFP routinely surprises by 100k+ and where the whispers are only thinking of a 30-40k delta.
- Jobless Claims
- 228k vs 235k f’cast, 232k prev
- Core PCE Inflation m/m
- 0.2 vs 0.2 f’cast, 0.2 prev
- Challenger Job Cuts
- Jobless Claims
08:50 AM
Flat overnight and flat after data. 10yr down 0.6 bps at 4.106. MBS up 1 tick.
11:32 AM
Modest strength continues for long end. 10yr down 1.8bps at 4.094. MBS up an eighth.
03:02 PM
Off the best levels in the PM hours. Not much volatility surrounding month-end 3pm closing bell. 10yr down 2bps at 4.09, but up from lows of 4.077. MBS still up 2 ticks (.06), but down 3 ticks (0.09) from highs.
04:20 PM
Some illiquidity-driven weakness making for a 1 tick (0.03) loss in MBS. Some organic weakness bringing 10yr up to 4.104 (but still down .8bps on the day).
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