Yields rise despite nonfarm payrolls miss. Yields dipped as much as 7 bps in the immediate aftermath of this morning’s September jobs report, where nonfarm payrolls came in below expectations and the unemployment rate edged up. The move fully reversed over the remainder of the session, with yields closing 1-5 bps higher across the curve. The 2-year yield closed at 4.83% (down 3 bps on the week) and the 10-year yield closed at 5.27% (up 11 bps on the week). Meanwhile, equities rallied as the labor data eased rate hike expectations, with the S&P 500 and NASDAQ closing 0.73% and 1.19% higher, respectively.
Nonfarm payrolls miss as unemployment rate ticks up. The US economy added 29k jobs in September, below estimates of 90k and the prior period’s 133k gain. Private payrolls increased by 46k, also below estimates of 81k and August’s 89k gain. While hiring has been choppy in recent months, the job market largely remains a low hire, low fire environment. Despite the unemployment rate ticking up to 4.2% in September, that was driven in part by an expanding workforce, and the level remains near historic lows. Thomas Simons, chief US economist at Jefferies, described today’s report as “the nail in the coffin for an October hike,” adding it gives the Fed “more time before another hike is needed.”
US to increase military presence in the Persian Gulf. According to reports today, the US is set to send up to 10,000 troops and a third aircraft carrier to the Persian Gulf, planned to arrive in the region by the end of November. The new deployment will also include fighter jets and will bring the total number of US troops in the region to nearly 50,000. After President Trump rejected Iran’s peace proposal at the UN General Assembly last week, tensions have continued to escalate between the two countries. At least four ships have come under attack this week in the Strait of Hormuz, according to maritime security agencies, including one struck by an unknown projectile Friday afternoon. WTI crude crept higher today on news of escalation, now trading near $91 per barrel.