Rates Rise Amid Strong Private Payrolls Data, Hawkish Fed Commentary  

Job data and Mary Daly’s speech spur rates rise. Swap rates and Treasury yields rose across a steepening curve today, led in part by to the 208k jobs that were created by U.S. private businesses in September, which exceeded market forecasts of 200k. The Fed’s Mary Daly then commented that the anticipation of next year’s cuts is misplaced, which furthered the momentum of the selloff. As a result, the 2-year yield rose ~5 bps to 4.14%, while the 10-year yield rose ~12 bps to 3.75%. Fed Funds futures continue to price in for a ~80% chance for a 75 bp rate hike in November. 

Non-manufacturing PMI exceeds market expectations. The ISM services PMI came in at 56.7 in September, which was larger than forecasts of 56. This pointed to growth above the historical average, despite slowdowns in business activities and new orders. These slowdowns were offset by multiple factors, including rises in employment levels and supplier delivery rates, as well as the easing of price pressures. 

Day ahead. Tomorrow will be a relatively quiet day ahead Friday’s nonfarm payrolls report. There will be public comments made by multiple Fed members, including voters Lisa Cook (dove) and Christopher Waller (hawk), as well as non-voter Charles Evans (dove).