Treasuries are selling off again this morning following another solid jobs report, and as has been the recent trend, stocks are also selling off in response to higher long-end yields (S&P 500 futures -21 points). The 10-year Treasury yield is now up to 2.83% (highest since January 2014), and the slope of the yield curve is 9 bps steeper over the last 24 hours (2yr/10yr spread). TIPS breakeven yields, which are a measure of market inflation expectations, are also back to 2014 levels.

Nonfarm payrolls added 200,000 jobs in January (20,000 more than expected), and the December payrolls figure was revised higher by 12,000 jobs. In the household survey, household employment grew by 409,000, and the official labor force expanded by 518,000. As such, the headline unemployment rate held at 4.1%. The biggest headline from today’s report was the wage data. Average hourly earnings rose 0.3% in January, and the December figure was revised higher to 0.4%. On a year-over-year basis, wages were up 2.9% in January (and December revised up 20 bps to 2.7%). If you were to point out a negative, it would be the fact that the average work week fell from 34.5 hours to 34.3 hours, but the earnings growth is the primary source of this morning’s move in Treasuries.

Jason Haley
Managing Director, Investment Management Group

Date Event Surv(M) Actual Prior Revised
01/29 Personal Income 0.30% 0.40% 0.30%
01/29 Personal Spending 0.40% 0.40% 0.60% 0.80%
01/29 Real Personal Spending 0.40% 0.30% 0.40% 0.50%
01/29 PCE Deflator MoM 0.10% 0.10% 0.20%
01/29 PCE Deflator YoY 1.70% 1.70% 1.80%
01/29 PCE Core MoM 0.20% 0.20% 0.10%
01/29 PCE Core YoY 1.50% 1.50% 1.50%
01/29 Dallas Fed Manf. Activity 25.4 33.4 29.7
01/30 S&P CoreLogic CS 20-City NSA Index 204.21 203.84 203.71
01/30 S&P CoreLogic CS 20-City MoM SA 0.60% 0.75% 0.70%
01/30 S&P CoreLogic CS 20-City YoY NSA 6.30% 6.41% 6.38% 6.32%
01/30 S&P CoreLogic CS US HPI NSA Index 195.94 195.63 195.48
01/30 S&P CoreLogic CS US HPI YoY NSA 6.21% 6.17% 6.10%
01/30 Conf. Board Consumer Confidence 123 125.4 122.1 123.1
01/30 Conf. Board Present Situation 155.3 156.6 156.5
01/30 Conf. Board Expectations 105.5 99.1 100.8
01/31 MBA Mortgage Applications -2.60% 4.50%
01/31 ADP Employment Change 185k 234k 250k 242k
01/31 Employment Cost Index 0.60% 0.60% 0.70%
01/31 Chicago Purchasing Manager 64 65.7 67.6 67.8
01/31 Pending Home Sales MoM 0.50% 0.50% 0.20% 0.30%
01/31 Pending Home Sales NSA YoY 1.70% -1.80% 0.60%
01/31 FOMC Rate Decision (Upper Bound) 1.50% 1.50% 1.50%
01/31 FOMC Rate Decision (Lower Bound) 1.25% 1.25% 1.25%
02/01 Challenger Job Cuts YoY -2.80% -3.60%
02/01 Nonfarm Productivity 0.70% -0.10% 3.00% 2.70%
02/01 Unit Labor Costs 0.90% 2.00% -0.20% -0.10%
02/01 Initial Jobless Claims 235k 230k 233k 231k
02/01 Continuing Claims 1929k 1953k 1937k 1940k
02/01 Bloomberg Consumer Comfort 54.6 53.7
02/01 Markit US Manufacturing PMI 55.5 55.5 55.5
02/01 Construction Spending MoM 0.40% 0.70% 0.80% 0.60%
02/01 ISM Manufacturing 58.6 59.1 59.7 59.3
02/01 ISM Employment 54.2 57 58.1
02/01 ISM Prices Paid 68.8 72.7 69 68.3
02/01 ISM New Orders 65.4 69.4 67.4
02/01 Wards Domestic Vehicle Sales 13.45m 13.10m 13.72m
02/01 Wards Total Vehicle Sales 17.20m 17.07m 17.76m
02/02 Annual Revisions: Establishment Survey        
02/02 Change in Nonfarm Payrolls 180k 200k 148k 160k
02/02 Change in Private Payrolls 181k 196k 146k 166k
02/02 Change in Manufact. Payrolls 20k 15k 25k 21k
02/02 Unemployment Rate 4.10% 4.10% 4.10%
02/02 Underemployment Rate 8.20% 8.10%
02/02 Average Hourly Earnings MoM 0.20% 0.30% 0.30% 0.40%
02/02 Average Hourly Earnings YoY 2.60% 2.90% 2.50% 2.70%
02/02 Average Weekly Hours All Employees 34.5 34.3 34.5
02/02 Labor Force Participation Rate 62.70% 62.70%
02/02 U. of Mich. Sentiment 95 94.4
02/02 U. of Mich. Current Conditions 109.2
02/02 U. of Mich. Expectations 84.8
02/02 U. of Mich. 1 Yr Inflation 2.80%
02/02 U. of Mich. 5-10 Yr Inflation 2.50%
02/02 Factory Orders 1.50% 1.30%
02/02 Factory Orders Ex Trans 0.80%
02/02 Durable Goods Orders 2.90%
02/02 Durables Ex Transportation 0.60%
02/02 Cap Goods Orders Nondef Ex Air -0.30%
02/02 Cap Goods Ship Nondef Ex Air 0.60%