Fed Commentary and Declaration of Martial Law in South Korea Highlight Today’s Session

South Korea martial law, labor data sways rates. South Korean President Yoon surprised markets today by declaring martial law after a prolonged period of political gridlock. The news pushed rates lower at various points throughout the session, though concerns later eased and rates climbed into the market close after Yoon quickly reversed the decision. Meanwhile, higher than expected job openings data provided more evidence of a robust labor market ahead of Friday’s nonfarm payrolls and unemployment rate prints, largely fueling a 4 bp rise in rates from 10 to 11 AM eastern. Rates closed little changed and rose 1-4 bps across most of the curve.

More Fed officials remain silent on December FOMC decision. Several Fed officials offered optimistic comments today about the state of decelerating inflation, including Fed Governor Kugler and Fed President Goolsbee. While Kugler expects continued rate cuts, she noted that she will “monitor for incoming risks or negative supply shocks that may undo the progress that we have achieved in reducing inflation.” Goolsbee argued that rates need to come down a “fair amount” from current levels, though he caveated that the timeline remains unclear because “conditions change.” Similarly, Fed President Daly opined that, “whether it’ll be in December or some time later, that’s a question we’ll have a chance to debate and discuss in our next meeting, but the point is we have to keep policy moving down to accommodate the economy.”

Job openings data points to stabilizing labor demand. OctoberJOLTS job openings data landed higher than expected at 7,744,000 vs. 7,519,000 while last month’s figures were downwardly revised, cementing the largest month-over-month job vacancy increase this year. The results were viewed as a positive sign that worker demand is growing, but also stabilizing in an orderly fashion toward pre-pandemic levels when overall openings were routinely below 7,000,000. In addition, since layoffs remained low while quits rose and total openings increased, some interpreted the figures as pointing to improved employer and worker confidence.