Rates Decline After Labor Data Hits Multiyear Low

Labor data and commentary from abroad force rates lower. After a one-day hiatus, Treasurys resumed their rally as yields and swap rates fell 6-11bps across the curve. Weak labor data and dovish commentary from one of the ECB’s notorious hawks drove the move that saw the 10yr UST yield hit its lowest level since August. Including today’s decline, rate are 60-80bps lower across the curve in the past 1.5 months.

Job openings hit two-year low. Per the October JOLTS data released this morning, job openings were at the lowest level since 2021 (8.7mm vs. 9.3mm estimated), declining by 617,000 in the month. Vacancies have steadily declined from a peak of 12 million last year, narrowing the gap between that and the unemployment level – a dynamic welcomed by the Fed and their quest for a soft landing.

Moody’s downgrades Chinese sovereign debt outlook. Amid substantial government debt and ongoing economic concerns, Moody’s downgraded China’s sovereign debt outlook from “stable” to “negative.” The ratings agency cited “increased risks related to structurally and persistently lower medium-term economic growth and the ongoing downsizing of the property sector” as additional sources of concern. In response (and to no one’s surprise), the Chinese government stated that their economy “will be highly resilient and has large potential.” Furthermore, China Chengxin International Credit Rating Co. argued against concerns over growing debt risks and said the outlook for the nation’s sovereign credit was stable.