June 2, 2021 Headlines

Both rates and equity futures are little changed following a very quiet overnight session. There’s nothing substantial on the calendar between now and Friday’s jobs report to capture the market’s attention, which should keep rate volatility subdued barring some surprise external event. One-month Libor reset down to a new record low of 0.085% today, as the major supply/demand imbalance in the money markets persists. The Fed’s reverse repo facility, which pays 0% on funds it receives, has seen record demand in Q2, and all money market rates have pushed closer to the zero bound. The repo facility has so far been successful at absorbing the excess liquidity and keeping rates from going negative, and as such, the Fed hasn’t yet chosen to make a technical adjustment higher in its administered rates (repo and IOER) to combat these pressures. However, this liquidity imbalance has likely contributed, at least partially, to recent acknowledgements from Fed leaders that the QE tapering discussion should begin at some point soon. In other words, if a large amount of excess liquidity generated by Fed asset purchases isn’t finding its way to borrowers or risk markets, it might be time to start slowly closing the spigot.

Jason Haley
Chief Investment Officer

06/01/21Markit US Manufacturing PMI61.562.161.5
06/01/21Construction Spending MoM0.50%0.20%0.20%1.00%
06/01/21ISM Manufacturing6161.260.7
06/01/21ISM Prices Paid89.58889.6
06/01/21ISM New Orders666764.3
06/01/21ISM Employment54.650.955.1
06/01/21Dallas Fed Manf. Activity36.334.937.3
06/02/21MBA Mortgage Applications-4.00%-4.20%
06/02/21U.S. Federal Reserve Releases Beige Book
06/02/21Wards Total Vehicle Sales17.30m18.51m
06/03/21Challenger Job Cuts YoY-96.60%
06/03/21ADP Employment Change650k742k
06/03/21Nonfarm Productivity5.50%5.40%
06/03/21Unit Labor Costs-0.40%-0.30%
06/03/21Initial Jobless Claims388k406k
06/03/21Continuing Claims3615k3642k
06/03/21Langer Consumer Comfort53.8
06/03/21Markit US Services PMI70.170.1
06/03/21Markit US Composite PMI68.1
06/03/21ISM Services Index6362.7
06/04/21Change in Nonfarm Payrolls653k266k
06/04/21Two-Month Payroll Net Revision-78k
06/04/21Change in Private Payrolls600k218k
06/04/21Change in Manufact. Payrolls20k-18k
06/04/21Unemployment Rate5.90%6.10%
06/04/21Average Hourly Earnings MoM0.20%0.70%
06/04/21Average Hourly Earnings YoY1.60%0.30%
06/04/21Average Weekly Hours All Employees34.935
06/04/21Labor Force Participation Rate61.80%61.70%
06/04/21Underemployment Rate10.40%
06/04/21Durable Goods Orders-1.30%-1.30%
06/04/21Factory Orders-0.30%1.10%
06/04/21Durables Ex Transportation1.00%1.00%
06/04/21Factory Orders Ex Trans1.70%
06/04/21Cap Goods Orders Nondef Ex Air2.30%2.30%
06/04/21Cap Goods Ship Nondef Ex Air0.90%

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