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Treasurys, Stocks Edge Lower as Dollar Rises After Strong Jobs Data

The Job Openings and Labor Turnover Survey (JOLTS) headlined a light day for new economic data.  The report from the Labor Department displayed a record high number of job openings for June at a seasonally adjusted 6.163 million, a 461,000 increase from the previous month’s upwardly revised figure and well above expectations of 5.75 million.  The job openings rate correspondingly increased to 4% (previously 3.8%), though the hiring rate held steady at 3.7%, indicating a skills mismatch in the current jobs market.  Most major sectors registered a rise in job openings, including a record high for health care postings, although the retail industry continued its struggles as it recorded one of the few declines in openings.  Other details in the report included layoffs, which edged higher to 1.7 million from 1.67 million, and the number of workers quitting their jobs, which declined to 3.13 million from 3.21 million as workers became less confident in their ability to find better employment outside of their current roles.  The US dollar rose for a third straight session against major currencies shortly after the labor figures were released, with the Bloomberg Dollar Spot Index currently up roughly 0.2% on the day.

 

 

It was another calm trading session in US financial markets for the majority of the day, with volatility gauges approaching record lows.  The CBOE Volatility Index (VIX), a measure of volatility in US equities, traded within two points of an all-time low while the Bank of America MOVE Index, the bond market equivalent of the VIX, opened at a new low as investors remain complacent given the lack of market-moving data in the early part of this week.  Volatility quickly jumped this afternoon following a tweet from President Donald Trump in which he said that the threats from North Korea would be “met with fire and fury and, frankly, power the likes of which the world has never seen before.”  US Treasurys experienced a modest selloff, with yields/swap rates up 1-2 bps across the curve.  All three major stocks indices finished down 0.15%-0.25% on the day, after trading higher for the majority of the session.  In doing so, the DJIA ended a streak of ten consecutive trading days of gains, three less than the longest on record.  Prices of crude oil seesawed between gains and losses on the day as news of a planned reduction in crude supplies from Saudi Arabia was largely offset by an increase to the EIA’s forecast of US crude production for the remainder of 2017 and 2018.  Crude oil futures settled marginally lower, with WTI crude hovering near $49.10/barrel.

 

 

In foreign markets, the South African rand opened the day nearly 1% higher against the US dollar following the news of a secret vote to take place today in which lawmakers could force the resignation of the existing, scandal-ridden President Jacob Zuma.  The gains were short-lived, however, as Zuma and his administration survived the no-confidence motion and will resume their current reign which extends until May 2019.  This marks the eighth time over the past eight years of ruling that Zuma has endured an attempt to be removed from office.  After the results of today’s vote were published, the rand gapped lower to its current level of 13.4 ZAR per dollar, down 1.4% for the session.

 

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