Yield Curve Steepens as the Long-End Sells-Off

Treasury curve re-steepens ahead of 30-year auction. Swap rates and Treasury yields continued to grind higher, this time at the long end of the curve, the 30-year Treasury yields closing 10 bps higher ahead of tomorrow’s Treasury auction. The 10-year Treasury yield breached 1.50% for the first time since the Omicron-fueled rally, climbing 5 bps on the day to close at 1.52%. Meanwhile, risk assets also rose, the S&P 500 climbing 0.3% to close within 0.1% of its all-time  high while the Nasdaq Composite rose 0.60%.

The gap between U.S. job openings and unemployed continues to grow. October U.S. job openings increased to the second-highest level on record to 11 million, while September openings were revised higher to 10.6 million. In October, the number of Americans unemployed was 7.4 million, revealing a 3.6 million gap compared to current job openings. A bright spot for employers was seeing the quit rate fall to 2.8% during the month, representing the first decline since May and showing some evidence that employers are having success retaining employees. The COVID pandemic is still playing a significant role in the labor market’s recovery as many people continue to stay on the sidelines.

The rest of the week ahead. Tomorrow U.S. initial jobless claims will be released at 8:30a EST with economists expecting 220,000 claims last week. The change in third-quarter U.S. household net worth will be released at 9a EST. On Friday, the market will get its latest look at current inflationary pressures with November CPI data being released. Analysts are estimating year-over-year headline CPI to hit 6.8%, up from the 6.2% increase in October.