Rates Plummet Despite Strong October Jobs Report

Swap rates and Treasury yields plummet despite strong jobs report. The economy added 531,000 jobs in October, beating expectations that had called for an increase of only 450,000. On top of the headline beat, payrolls for the prior two months were also revised higher- pulling the unemployment rate down to 4.6% (better than expected).  Wage inflation continued to be strong, the report showing wages increasing 4.9% on an annualized basis. Nonetheless, swap rates and Treasury yields were lower throughout the day and closed near the intraday lows- the 10-year Treasury yield falling 9 basis points to close below 1.50% at 1.45%.

All three US equity benchmarks end week on record highs. All three major US equity indices ended the day at records, shrugging off the Fed’s taper announcement to end another week of gains. The S&P 500 rose 0.40% to cap off its 7h straight day of gains, 10 of 11 industry groups gaining on the day with healthcare the lone laggard. Pfizer announced a promising Covid-19 pill that was seen to reduce hospitalizations and deaths by 89% in a recent study- helping buoy “re-opening” stocks as well.

Week ahead. Next week will be significantly lighter from a data release perspective. PPI figures will be released Wednesday, followed by CPI data on Thursday which will be closely watched for signs of accelerating inflation. Wholesale inventories and the University of Michigan’s Consumer Sentiment Survey will round out the week.