(CercleFinance.com) – This start of November is particularly volatile for bonds, with a session in 2 stages: a timid improvement in the morning, then a clear deterioration from 1:45 p.m., despite employment figures (‘NFP’) published at 1:30 p.m. which encouraged the anticipation of a rate cut next Wednesday.
The number of jobs is the opposite of expectations with +12,000 creations instead of the +150,000 expected (12.5 times less)
But above all, the Department of Labor and ADP (which lists hiring in the private sector) seem to be operating on very distant planets with the publication on Wednesday of an estimate of +233,000 jobs (instead of +160,000 at the top of the range, or 50 % more than expected).
In addition, the unemployment rate remained at 4.1%, in line with expectations, while the labor force participation rate stood at 62.6%, and the average hourly income increased. increased by 4% over one year.
Finally, the creations of non-agricultural jobs for the two previous months were significantly revised downwards, from 159,000 to 78,000 for August and from 254,000 to 223,000 for September, i.e. a total revision balance of -112,000 for these two months.
‘The labor market undoubtedly suffered from various hazards in October,’ Oddo BHF warned at the start of the week.
The deterioration of the interest rate markets therefore does not seem to have an obvious logical link with the NFP – since the US ’10 years’ rises by +8.5 points towards 4.3700%, the ’30 years’ by +9 points towards 4.5650 % (worst scores since July 4).
But no one anticipated a -95% fall in job creation, which means that the figure is very ‘skewed’ and it will certainly see a sharp upward revision next month… that’s what the forecast says. Joe Biden who rushed to make a reassuring statement on this subject.
Another highly anticipated figure, the United States manufacturing PMI index (calculated by S&P Global): it recovered slightly in October, standing at 48.5 against 47.3 the previous month, but remains below the threshold of 50 which marks the limit between expansion and contraction of the sector’s activity.
S&P Global said production and new orders fell less sharply last month, while inflationary pressures eased and recent hurricanes caused delays in supply chains.
Published separately, the Institute for Supply Management (ISM) index paints a less cheerful picture in the American manufacturing sector which contracted to 46.5 for the past month, compared to 47.2 in September.
Here again, no explanation for an outbreak of +10 Points in a straight line between 1:45 p.m. and 5 p.m.
In Europe, the Bund is suffering contagion from US rates with +1.8Pt to 2.41%, our OATs are increasing by +2.8Pts towards 3.1620% and Italian BTPs by +1Pts towards 3.6760%.
Finally, the debacle on ‘Gilts’ continues in the United Kingdom where yields soared by an additional +11 points towards 4.552% before falling back by 5 points towards 4.5020%.
This is the worst level observed since mid-October 2023, and the mini-bond and then pound crash which cost Prime Minister Liz Truss her place, whose spending recovery plan had panicked the markets.
Keir Starmer’s ‘mini-budget’ is in turn censored by the markets.
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