Job Data Yields Mixed Treasury Session

Treasury yields waver, stocks rise after release of U.S. jobs figures. This morning’s October employment report was a mixed bag, displaying robust growth in nonfarm payrolls while the unemployment rate rose to a four-month high. Treasury yields initially rose with the strong headline jobs figure, but pulled back as markets digested the data within the release. Yields/rates finished mixed across the curve, with the 2-year yield falling ~6bps to 4.66% and the 10-year yield rising ~1bp to 4.16%. Equities had a positive session, with S&P and NASDAQ rising ~1.36% and 1.28%, respectively.

More jobs, higher unemployment rate highlight report. Nonfarm payrolls increased by 261,000 throughout October (+193,000 expected), following an upwardly-revised increase of 315,000 in September. Job gains were broad-based, with the healthcare and professional and technical services industries gaining the most jobs among categories measured. The unemployment rate rose more than expected at 3.7%, while the labor participation rate fell slightly to 62.2%. Additionally, wage gains showed an acceleration in MoM growth (+0.4%), but slowed YoY (+4.7%). The mixed release comes amidst aggressive rate hikes and tightening economic conditions, and unfortunately only raises more questions about the future rate hike trajectory. While Chair Powell recently described the labor market as “very, very strong”, he also acknowledged the lagged impact rising rates have on the economy.

Week ahead. Inflation data is set for release on Thursday morning at 9:30 AM ET. Michigan consumer sentiment for November will be revealed on Friday.