“The most consistent way to trade a payrolls release this year has been to fade any rates sell off that results from an above-consensus NFP result," says Janney chief fixed-income strategist Guy LeBas, noting this morning's inline report may not offer that opportunity today, but the trend of the retreating importance of NFP and "every other high-frequency result" in driving policy continues.
Edison Investment's Peter Molloy, however, says the 2.1% Y/Y growth in average hourly earnings indicates marginally less slack in the U.S. economy than previously thought. "It’s a difficult time for Fed policymakers as they have to balance their views on how this cycle might be different with unemployment at levels which would more usually be associated with low but rising interest rates. We can see why at least some Fed officials are concerned that markets are too tranquil given the uncertainties.”
The 10-year yield is lower by two basis points to 2.56%. Eurodollar futures are higher by a couple of basis points (yields lower), with the first rate hike still pretty much priced in by June of next year.