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

01/29Personal Income0.30%0.40%0.30%
01/29Personal Spending0.40%0.40%0.60%0.80%
01/29Real Personal Spending0.40%0.30%0.40%0.50%
01/29PCE Deflator MoM0.10%0.10%0.20%
01/29PCE Deflator YoY1.70%1.70%1.80%
01/29PCE Core MoM0.20%0.20%0.10%
01/29PCE Core YoY1.50%1.50%1.50%
01/29Dallas Fed Manf. Activity25.433.429.7
01/30S&P CoreLogic CS 20-City NSA Index204.21203.84203.71
01/30S&P CoreLogic CS 20-City MoM SA0.60%0.75%0.70%
01/30S&P CoreLogic CS 20-City YoY NSA6.30%6.41%6.38%6.32%
01/30S&P CoreLogic CS US HPI NSA Index195.94195.63195.48
01/30S&P CoreLogic CS US HPI YoY NSA6.21%6.17%6.10%
01/30Conf. Board Consumer Confidence123125.4122.1123.1
01/30Conf. Board Present Situation155.3156.6156.5
01/30Conf. Board Expectations105.599.1100.8
01/31MBA Mortgage Applications-2.60%4.50%
01/31ADP Employment Change185k234k250k242k
01/31Employment Cost Index0.60%0.60%0.70%
01/31Chicago Purchasing Manager6465.767.667.8
01/31Pending Home Sales MoM0.50%0.50%0.20%0.30%
01/31Pending Home Sales NSA YoY1.70%-1.80%0.60%
01/31FOMC Rate Decision (Upper Bound)1.50%1.50%1.50%
01/31FOMC Rate Decision (Lower Bound)1.25%1.25%1.25%
02/01Challenger Job Cuts YoY-2.80%-3.60%
02/01Nonfarm Productivity0.70%-0.10%3.00%2.70%
02/01Unit Labor Costs0.90%2.00%-0.20%-0.10%
02/01Initial Jobless Claims235k230k233k231k
02/01Continuing Claims1929k1953k1937k1940k
02/01Bloomberg Consumer Comfort54.653.7
02/01Markit US Manufacturing PMI55.555.555.5
02/01Construction Spending MoM0.40%0.70%0.80%0.60%
02/01ISM Manufacturing58.659.159.759.3
02/01ISM Employment54.25758.1
02/01ISM Prices Paid68.872.76968.3
02/01ISM New Orders65.469.467.4
02/01Wards Domestic Vehicle Sales13.45m13.10m13.72m
02/01Wards Total Vehicle Sales17.20m17.07m17.76m
02/02Annual Revisions: Establishment Survey    
02/02Change in Nonfarm Payrolls180k200k148k160k
02/02Change in Private Payrolls181k196k146k166k
02/02Change in Manufact. Payrolls20k15k25k21k
02/02Unemployment Rate4.10%4.10%4.10%
02/02Underemployment Rate8.20%8.10%
02/02Average Hourly Earnings MoM0.20%0.30%0.30%0.40%
02/02Average Hourly Earnings YoY2.60%2.90%2.50%2.70%
02/02Average Weekly Hours All Employees34.534.334.5
02/02Labor Force Participation Rate62.70%62.70%
02/02U. of Mich. Sentiment9594.4
02/02U. of Mich. Current Conditions109.2
02/02U. of Mich. Expectations84.8
02/02U. of Mich. 1 Yr Inflation2.80%
02/02U. of Mich. 5-10 Yr Inflation2.50%
02/02Factory Orders1.50%1.30%
02/02Factory Orders Ex Trans0.80%
02/02Durable Goods Orders2.90%
02/02Durables Ex Transportation0.60%
02/02Cap Goods Orders Nondef Ex Air-0.30%
02/02Cap Goods Ship Nondef Ex Air0.60%