$GTC $SAND $CT Don't sleep too soundly tonight. The US September non-farm payrolls are coming—Friday, October 2. This is the last employment report before the Fed’s October 28 meeting. But the market is acting like it hasn’t woken up: expectations are for an increase of 90,000, down from the prior 162,000. The key isn’t the 90,000—it’s whether August will be revised sharply lower. The seasonal adjustment this time is rather wild: Barclays said that, after re-weighting this year’s factors, August’s 162,000 could become -74,000. 😳
Even the Fed’s expectations have turned faster than a page: on Monday, the odds of a rate hike in October were still 70%. After Williams said “not in a hurry to hike” plus core PCE coming in mild, by Thursday’s close the odds dropped to just 25%. Goldman has pushed the next hike to December.
But the real powder keg is in the long-end bond market. Goldman: CTA holds short positions of about $390 billion in global bonds, with the 10-year U.S. Treasury short position at 99% of its all-time high, and the 30-year at 100%. If the non-farm report is weak and the unemployment rate drops to 4.2%, short-covering could spark a big blast of volatility. 💣
The script is roughly in three tiers:
40k–100k, unemployment rate 4.0–4.1: stocks and bonds stay mildly upbeat;
above 120k, unemployment rate 4.0: rate-hike expectations for October get slaughtered again;
below 20k, or unemployment rate 4.2+: rate-hike expectations turn ice-cold, and bond shorts get squeezed hard. 🚀
Don’t forget: the August revision could be even more sensational than September’s headline. Tonight, watch the unemployment rate—and also watch August. 📉📈 #非农 #美联储 #美债
Even the Fed’s expectations have turned faster than a page: on Monday, the odds of a rate hike in October were still 70%. After Williams said “not in a hurry to hike” plus core PCE coming in mild, by Thursday’s close the odds dropped to just 25%. Goldman has pushed the next hike to December.
But the real powder keg is in the long-end bond market. Goldman: CTA holds short positions of about $390 billion in global bonds, with the 10-year U.S. Treasury short position at 99% of its all-time high, and the 30-year at 100%. If the non-farm report is weak and the unemployment rate drops to 4.2%, short-covering could spark a big blast of volatility. 💣
The script is roughly in three tiers:
40k–100k, unemployment rate 4.0–4.1: stocks and bonds stay mildly upbeat;
above 120k, unemployment rate 4.0: rate-hike expectations for October get slaughtered again;
below 20k, or unemployment rate 4.2+: rate-hike expectations turn ice-cold, and bond shorts get squeezed hard. 🚀
Don’t forget: the August revision could be even more sensational than September’s headline. Tonight, watch the unemployment rate—and also watch August. 📉📈 #非农 #美联储 #美债
