Yields Remain Historically High

Rates jump another 5-13bps. Swap rates and Treasury yields continued yesterday’s bear steepening and propelled the 10-year UST yield to above 4.80%, an extension of highs not seen since 2007. Swap rates are also at their highest since 2007, though 2y rates were a few bps higher in mid-September. Meanwhile, today’s strong labor market data boosted rate hike bets, and futures now suggest a ~52% probability of an incremental 25bp hike in 2023.

August’s labor strength driven by white collar hiring. August JOLTS (Job Openings and Labor Turnover Summary) data, released today, beat expectations for the number of job openings (~9.6mm actual vs. ~8.8mm est.) and climbed almost 700k vs last month’s revised figures. The increases were driven by a surge in openings within the professional and business services, financial services, and education sectors. The data also includes hiring and separations data, which were both little changed MoM; net hiring was ~200k in August. Yields jumped and stocks fell immediately after the report, since a hot labor market means more room for the Fed to hike/keep rates high.

McCarthy ousted as US House Speaker. Dysfunction in the US government is again at the forefront, and today’s vote to remove Kevin McCarthy as US House Speaker headlined. The US recently navigated a few close calls with McCarthy at the helm: a debt default earlier in the year and last week’s near government shutdown, but the navigation came with clear signs of disorganization. The S&P recently downgraded US debt and cited disarray in Washington as the cause, while Moody’s warned that they may do the same in the near future.