Rates Rise Again Ahead of Nonfarm Payrolls  

Treasurys sell-off ahead of Friday’s nonfarm payrolls report. Yesterday’s Fed-driven price action bled into today, with Treasury yields rising across a flattening curve, the 2-year yield increasing ~10bps to 4.72% and the 10-year yield rising ~5bps to 4.15%. Tomorrow’s nonfarm payrolls report will quickly provide some feedback on how the labor market is enduring rising rates, with forecasts suggest that October’s payroll growth will slow to 200k.

Bank of England delivers largest rate hike in 33 years and offers blunt commentary on outlook. The Bank of England (BOE) voted to lift rates by 75bps to 3% today, the highest level in 14 years. The large hike matched that of the Fed’s yesterday, however was accompanied by a different narrative. In unusually direct commentary from a central bank, the BOE told markets that rates will not increase to the degree currently priced in. The BOE’s economic outlook implied that the UK is in a recession and forecasts 8 consecutive quarters of U.K. GDP decline. Additionally, it expects inflation to peak at 10.9% in the coming months, falling to 0% by 2025. The Dollar strengthened 2.09% as a result, while UK yields rose with the 10-year gilt ending the day up 7bps at 3.49%.

Day ahead. Non farm payrolls for the month of October is set for release at 8:30 AM ET. October’s unemployment rate data will also be announced at 8:30 AM.