Job market deceleration
August 30, 2023
-Two pieces of data sparked a large drop in yields and associated stock rally (SPX up 1.45%). JOLTS, expected at 9.5m was actually 8.827m. The high in 2018 was 7.594, so the level of job openings is still relatively high. Consumer Confidence was reported at 106.1 vs 117 last. The ten year note dropped 8.4 bps to 4.124%. The curve bull steepened as twos plunged 11.8 bps to 4.89%. On the SOFR strip, SFRU4 led the surge, settling +15.5 bps at 9543.5. The Dec’23/Dec’24 one-year calendar spread declined by 9 bps to -123 (9456.5/9579.5). As mentioned previously, the Fed’s June SEP indicates end of 2023 FF at 5.6% and end of 2024 at 4.6%, a spread of -100.
–Today we get more clues regarding the labor market, with ADP expected 195k from 324k last. Second revision Q2 GDP expected 2.4% from an original estimate of 2.0. Q/Q PCE prices expected 2.2% from 4.1. Tomorrow Personal Income and Spending along with PCE prices. Friday features the employment report with NFP expected 170k. ISM Mfg as well.