Job openings increased sharply in August, beating expectations

Oct. 4:

The news today is all about jobs, jobs, jobs. And a jittery market cares a lot about jobs, jobs, jobs as the strength of the labor market remains a key factor in determining the Federal Reserve’s next steps, or the length of time rates will remain high.

August report boasts 9.61M job openings

Yesterday, a phenomenal Job Openings report indicated August saw 9.61 million new positions, a sharp 690,000 increase from the 8.92 million seen in July, much of it for white-collar jobs. That caused the five-year Treasury yield to surge by almost 10 basis points.

Bond yields continued to increase into the wee hours, but this morning, the ADP Employment Report for September told a different story, showing only 89,000 new jobs in August — far below expectations.

As always, we caution that the ADP report is often only a weak indicator as to what Friday’s employment report from the Bureau of Labor Statistics may look like, but for today, it has brought yields down sharply. That five-year Treasury yield has ratcheted within a 18-basis point range the last couple of days, falling this morning to 4.76%, which is not far from where it was early yesterday.

More jobs data ahead

Expectations of a rate hike at the Dec. 13 Federal Open Market Committee meeting had looked like fifty-fifty yesterday, but this morning the futures market saw it at just under 40%.

We’ll see jobless claims tomorrow and employment numbers Friday, and after that, we may get a better view of market direction. That said, the CPI report due on Oct. 12 will also be pivotal, as will the unending stream of key reports thereafter.