Learn from the Past
Jobs, Jobs, Jobs: Its Big Jobs Friday! You can read the official BLS report here.
Tale of the Tape:
Non-Farm Payrolls (NFP) for October 638K vs. est. of 600K
NFP September revised upward from 661K to 672K
NFP August revised upward from 1.489M to 1.493M
The Average Hourly rate increased 4 cents to $29.50.
Average Hourly Earnings MOM increased by 0.1% v estimates of 0.2%
Average Hourly Earnings YOY increased by 4.5% vs. estimates of 4.6%
The headline Unemployment Rate Dropped to 6.9% vs. estimates of 7.7%
The U6 Underemployment Rate dropped from 12.8% down to 12.1%
The Participation Rate increased from 61.4% to 61.7%.
What’s on the Agenda for this Week?
The three areas that have the greatest ability to impact backend pricing this week are: (1) Geopolitical,(2) Coronavirus and (3) Central Bank Palooza
(1) Geopolitical: It’s another week and the markets will continue to be impacted by election expectations. While the media outlets have crowned Biden as the winner, it’s very important to note (from a market perspective) that there is still a great measure of uncertainty related to the Presidential election. The last election took 37 days to have the results certified by the states and the federal government. That has NOT happened yet and the results of this election will be litigated most likely for longer than the last one. So while the odds certainly point to one candidate over the other, the uncertainty will remain a driving force in pricing. Other factors include the likelihood of any type of stimulus package being passed at all prior to late January, who the next House Speaker is, who the next Treasury Secretary is, etc.
(2) Coronavirus: Nationally and globally, the number of confirmed cases of Covid-19 continue to reach new records; however, this morning’s news of Phizer’s Novovax being over 90% effective is a game changer for the economic outlook.
(3) Central Bank Palooza: There will be key speeches from our Fed Chair Powell, the European Central Bank President Lagarde and Bank of England Governor Bailey. There will also be interest rate and policy statements from Mexico and New Zealand.
Here is this week’s Treasury schedule:
11/09: 3 year note
11/10: 10 year note
11/12: 30 year bond ***most important***
Treasury Dump: Three days of Treasury auctions kicked off with the shorter term 3-year note. $54B went off at a high yield of 0.250%. The bid-to-cover ratio was 2.4.
On Deck for Tomorrow: FNMA Bond Coupon Rollover, JOLTS, 10-year Treasury auction.