Private Jobs data signals stronger than expected labor market

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Published Date 10/2/2024

The only data today, September ADP private jobs exceeded forecasts, expected at +121.5K jobs increased to 143K and there was a slight revision to August from 99K to 103K. Prior to the 8:30 am ET release the 10 year note 3.76% + 2 bps, after the report the 10 year note hit its upside support at 3.80%. The stronger jobs add more to the now debate around a rate cut at the November FOMC meeting, from a 50% probability now down to a 33% probability at the next meeting. Powell has said the central bank is confident “strength in the labor market can be maintained in a context of moderate growth and inflation moving sustainably down to 2%.” ADP data has a record of being divergent to the BLS data coming on Friday.

The job market is now the Fed’s priority over inflation, the consensus at the Fed is inflation will continue to move toward 2.0%; keeping employment gaining is what the Fed needs to see these days; some see job growth less can 200K a month as a slowing labor market, that isn’t our take, jobs are still strong as was evidenced by the JOLTS job openings increasing yesterday. The Longshoreman’s strike if it lasts any length will send the weekly jobless claims much higher.

Israel has warned of a major response to Iran’s missile attack on Israel. Once again markets don’t appear to be concerned, there is no evidence of a move to safe havens in the US Treasury market, although stock indexes are soft presently, it isn’t reflecting the concerns over a major escalation in the mid-east although Israel is floating comments about attacking Iran’s oil installations.

At 9:30 am the DJIA opened -123, NASDAQ -62, S&P -21. 10 year note at 3.81% +7 bps and trading at a key short term technical level; the note has not closed above 3.80% since the beginning of September. At 9:30 am the FNMA 5.5 30 year coupon down 15 bps from yesterday’s close and -14 bps from 9:30 am yesterday.

Weekly MBA mortgage applications last week: the composite -1.3% from +11.0% the prior week, purchase apps +0.7% from +1.4%, re-finances -2.9% from +20.3%.

Source: TBWS

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