Benchmark Treasury yields continue to climb as the Labor Department revealed today that job growth in the month of September retreated to its lowest level in the past 12 months, but the unemployment rate fell to its lowest level in almost 50 years. Yields continued their weeklong ascent with the 10-year note hitting 3.237 and the 30-year settling to 3.403 as of 12:45 p.m. ET.
In addition, shorter duration yields also ticked higher with the 2-year reaching 2.897and the 5-year rising to 3.085. U.S. equities were not fairing well with the Dow Jones Industrial Average falling over 200 points, the S&P 500 down 20 points and the Nasdaq Composite down over 100 points.
Source: tradingeconomics.com
“As I have been saying, two consecutive closes above 3.25 percent on the benchmark 30-year Treasury means that my statement in July 2016 that we were seeing the low — I said italicized, underlined and in boldface — is now, looking at the charts, thoroughly corroborated,” said Jeffrey Gundlach, chief executive of Doubleline Capital.
“The last man standing was the 30-year, and it has definitively broken above a multiyear base that should over time carry us to significantly higher yields. Also, the curve is steepening a little in this breakout, which is another sign that the situation has changed,” Gundlach added.
Looking closer at the mixed jobs data, nonfarm payrolls gained 134,000, which was over 50,000 jobs below the Refinitiv estimates of 185,000. However, the unemployment rate fell to 3.7 percent, which was one-tenth of a percentage below initial forecasts.
Furthermore, the average hourly earnings data showed a 2.8% year-over-year increase, which matched initial expectations, while the average work week came in at a static 34.5 hours.
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Today’s data paired the unemployment claims data last week, which fell to a 49-year low, pointing to sustained strength in the labor market. Claims for unemployment benefits fell to 207,000, besting the forecasted 213,000 by a Reuters poll of economists.
Private payrolls grew stronger than expected in September with 230,000 positions added. The private payrolls total easily bested the 168,000 jobs added in August–more than the 185,000 expected by a survey of economists and the highest number of payrolls added since the 241,000 added in February.
Additionally, the U.S. services sector grew last month at its fastest pace based on data released by the Institute for Supply Management. The ISM non-manufacturing index ticked up to 61.6, which represents its highest level since 2008, beating out a poll of economists expecting the index to show 58 for the month of September.
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