PrefBlog

The American jobs report yielded signs that the labour market has reached an inflection point:

The jobs report came in below expectations, but wasn’t a major headline grabber, even as unemployment dropped to its lowest rate since 1969, as the strong labor market is well known at this point.

The most notable aspect of the report was the strong sequential wage trends “that put wage growth on track to cross 3% in October, supported by broadening wage pressures across sectors,” writes Morgan Stanley ’s Robert Rosener.

… which had an effect on Treasuries:

Treasury yields hit fresh multiyear peaks on Friday, extending their weeklong ascent, after a key jobs report showed tightening labor markets were leading to wage gains—a bearish development for bond bulls.

The Bureau of Labor Statistics reported the U.S. had added 134,000 jobs in September, below the 168,000 jobs expected from economists polled by MarketWatch. July’s and August’s numbers were increased. The unemployment rate fell to 3.7%, its lowest level since 1969. While, the average hourly earnings rose 0.3%, after a stellar 0.4% gain the previous month.

The 10-year Treasury note yield … rose 3 basis points to a seven-year high of 3.227%, contributing to a weeklong climb of 17.1 basis points, its largest such rise since February. The 30-year bond yield … rose 4.2 basis points to 3.396%, extending its weeklong rise to 20 basis points, its biggest such climb since the week of President Donald Trump’s election.

The shorter-end of the bond market showed a more modest rise. The 2-year note yield … rose 0.8 basis point to 2.888%, its highest since 2008. The short-dated maturity posted a weeklong yield gain of 7 basis points. Bond prices move in the opposite direction of yields.

In Canada we’re still grinding away at unemployment:

Canada’s job market gained 63,000 positions in September, edging the unemployment rate lower to 5.9 per cent, and offsetting job losses in August, Statistics Canada reported Friday.

September’s increase in employment was largely driven by gains in part-time work, with part-time jobs up by around 80,000, the agency said in its monthly labour force survey.

And Five-year Canadas popped up to 2.49% to close the week.

The increase in yields must have been good for FixedResets, eh? Well … um … profit-taking! FixedResets were hit by profit-taking! Unless it was something else. Manulife issues got whacked … perhaps by those pesky short-sellers. No wonder Elon Musk hates them so much!

This entry was posted on Friday, October 5th, 2018 at 5:24 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.