Oct. Jobs Report-First Thoughts
The 190,000 job loss number is a tad worse than expectations. Lots of bearish commentary on CNBC and Bloomberg TV. The bond market has not rallied like it did last month, though. Price action in USTs, yields down 6 bps or so, suggests the number is not that much worse than expectations. Now look at the August and September non-farm payroll revisions. Remember how much the bond market rallied after the September report of 263,000 jobs lost? The 10 year ticked at 3.1%. But that number has been revised to only down 219,000.
August and September job losses were overstated by a combined 91,000 jobs. That’s almost 50,000 jobs a month. The August number was revised from a loss of 201,000 to a loss of 154,000 jobs. If October had come in at a loss of 140,000 jobs, the bond market would be selling off and the stock market futures would be screaming.
Net, net. The recovery is on track, albeit at a not so blistering pace. Next up for the markets: lots of worries, and rightly so, about the Christmas selling season and what that means both for corporate profits and for production plans into the first 4-6 months of next year.
