September payrolls came in at just 29,000 on Friday (2 Oct), well below the expected 85,000, and unemployment rose to 4.2%. That all but ruled out an October hike in terms of market expectations, with odds falling to around 20%.
Interestingly, the long end did not rally (i.e. yields did not fall). The 30Y is at 5.63%, and 2s10s has widened to 46bp from 35bp last Wednesday. ISM manufacturing prices paid jumped to 77.9, the highest since 2022, giving the bond market reason to keep pricing in inflation concerns.
What concerns my discretionary bias is that long-end bonds aren’t rallying on bad news, while the dollar is at an 18-month high. This may cap the risk-asset rally. The FOMC minutes land on Wednesday, and September CPI on 14 October will decide whether December is still a hike.
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Disclaimer
This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities.
Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.