Yield Curve Tells Us More Than We Think
The BLS reported that payrolls jumped by 162,000, more than tripling estimates of a 50,000 gain. While helpful to know how analysts view the data, they often contradict one another, creating confusion.
Useful takeaways from this story.
The BLS reported that payrolls jumped by 162,000, more than tripling estimates of a 50,000 gain.
While helpful to know how analysts view the data, they often contradict one another, creating confusion.
Instead, we prefer to know what the world's largest bond portfolio managers and traders think about the data and how it may impact the Fed and inflation.
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The useful part
The BLS reported that payrolls jumped by 162,000, more than tripling estimates of a 50,000 gain. While helpful to know how analysts view the data, they often contradict one another, creating confusion. Instead, we prefer to know what the world's largest bond portfolio managers and traders think about the data and how it may impact the Fed and inflation.
How it works
- As we share below, the 1-year yield jumped 5 basis points, the 2-year rose nearly 4, and the 5-year followed with smaller but still positive moves.
- The strong employment data gives Warsh and other hawks ammunition to raise rates.
- However, there is more to the story: the 10-year yield was only up marginally, while the 20- and 30-year yields fell.
- Peter Cardillo, chief market economist at Spartan Capital Securities Initial media headlines say interest rates rose on the employment report.
Details worth keeping
Unemployment held at 4.1%, and wages rose 0.3% for the month. For now, the labor market looks steady, not strong, not collapsing. While short-term rates did increase, long-term rates were flat or lower.
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