Payrolls grew just 155k in November, well below the estimate of 198k and the two prior months were revised down by 12k. Of this, the private sector added 161k (with the government shedding 6k). The household survey saw a job gain of 233k which was more than the increase in the size of the labor force of 133k but the U3 unemployment rate held at 3.7%. U6 though did …
An exhausting week, even with just 4 days of trade
At the stock market lows yesterday, rate hike odds at the December meeting had fallen to 66% from 80% on Monday. After the market rally and Powell's comments last night, they are back to about 70% according to Bloomberg's WIRP and 75% on the CME. He said "Our economy is currently performing very well overall, with strong job creation and gradually rising wages. In …
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Rate hike odds shrinking
Rate hike odds for the December meeting in two weeks continue to moderate. Odds were about 80% on Monday. Today they stand at 66%. The 2 yr note yield is plunging by 9 bps today to 2.70%, the lowest in 3 months. There is one thing to pause on rates by one’s own volition to take a step back and monitor the impact of what you’ve already done. But to take a pause because …
ISM Services
The November ISM services index rose .4 pts to 60.7 and that was 1.7 pts better than expected. For comparison, the 6 month average is 59.3. New orders rose 1 pt to 62.5 and is the best since June while backlogs were up 2 pts after falling by 3 pts last month. Following the ADP report and ahead of tomorrow’s payroll report, employment fell 1.3 pts to a 3 month low but …
Hiring’s and firing’s/Trade Deficit hits 10 yr high
ADP said 179k private sector jobs were created in November, 16k less than expected. October was revised down by a slight 2k to 225k. Almost all of the job contribution was from small and medium sized businesses as large companies with more than 1000 employees shed 7k people. With respect to the latter and what’s to come, Challenger, Gray who measures firing’s said …
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Imagine for a second…
Imagine for a second that the Chinese government arrested the CFO of Apple and extradited him to the US. While it's not the case, also imagine if the CFO was the child of Steve Jobs. I'll leave my comments at that. In yesterday’s Beige Book, the Fed described the US economy as having “expanded at a modest or moderate pace from mid October through late November, …
Bond yields
Only 13 bps now in the 2s/10s yield spread. What is the most striking aspect of this move is the extent of it in just two days and how the acceleration came out of nowhere right after a supposed amicable meeting between the US and China. It's almost as if the bond market screamed out, "It's too late, the growth slowdown underway can't be reversed. Tariffs are still …
How yield spreads are closing
We are finishing up the day with the 3s/5s spread now inverted for the first time since November 2008 and a 2s/10s spread at just 15.5 bps vs 20 on Friday and 27 bps two weeks ago. What’s interesting is that the 2 yr note yield is back at 2.83%, where it closed last Tuesday before Powell gave his “just below” speech on Wednesday. …
2s/10s spread breaks below 20 bps
It hasn’t been a topic of conversation recently but I just want to highlight that the US 2 yr yield – 10 yr spread today is breaking below 19 bps, the lowest since June 2007. The 2 yr and the 5 yr yield spread is down to 2 bps. The 7 yr and 10 yr spread is now at 8 bps. Lastly, 3 month LIBOR and the US 2 yr is just 5 bps vs 35 bps just one month ago. I’m not sending …
US Manufacturing
The November ISM manufacturing index rose to 59.3 from 57.7 and that was better than the expected decline to 57.5. The index reached a high this year in August at 61.3 and was at 59.8 in September. After falling by 4.4 pts in October, new orders rebounded by 4.7 pts in November. Backlogs were up by .6 pts. Export orders held at 52.2, the lowest since November 2016, …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.