Job openings increased sharply in August, beating expectations
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.
State of the market
The rout in equities seen yesterday has slowed, with the Dow trading up this morning. Relative to Tuesday morning, Treasury yields were up.
Wednesday, Oct. 4
ISM Services PMI
Thursday, Oct. 5
Trade Balance Report
Weekly Initial Jobless Claims
Friday, Oct. 6
Monthly Employment Report
There are no auctions of Treasury notes or bonds this week.
By Mike Kraft, Executive Director and Commercial Real Estate Treasurer for Commercial Banking
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