Treasury prices rose on Wednesday as the ADP report showed private payrolls actually contracted in September by 39,000 versus an expected increase of 20,000. Both the 2-year and the 5-year notes reached record low yields, declining to 0.38% and 1.12% respectively as the sudden drop in this employment report. This lent support to the view that the Fed would step up its Quantitative Easing efforts after the election and that they are committed to keeping rates at extremely low levels for the foreseeable future in order to boost economic growth. By the end of the day the 2-year note rose 1/32 to yield 0.38% while the 5-year note gained 5/32 yielding 1.16%. Meanwhile, the benchmark 10-year note rose 20/32 of a point to yield 2.40% while the 30-year bond appreciated 1 and 11/32 of a point to yield 3.67%.
Treasury prices are reacting to this morning’s economic releases showing a slightly better than expected reading in the weekly claims report. The 2-year Treasury note has increased 1/32 to yield 0.35% while the 5-year note is trading 4/32 higher yielding 1.13%. The benchmark 10-year note is currently trading up 2/32 to yield 2.39% while the long bond has dropped 12/32 to yield 3.69%. For the record, the Department of Labor released this morning its weekly Initial Jobless Claims report showing that first time claims were lower than expected at 445,000 versus analyst’s estimate of a 455,000 increase. However, the Continuing Claims report showed a slightly higher than expected reading at 4.462 million versus the expected 4.450 million. The more stable 4-week average of Initial Claims came in closer to the 450K mark at 455,750, a drop of 3,000 from the previous period. Market participants will now wait for tomorrow’s change in Nonfarm payrolls and the Unemployment Rate. Analysts now estimate payrolls will decrease by 5,000 in September and Unemployment will increase by 0.10% for the same period to reach 9.70%.
Treasury prices are reacting to this morning’s economic releases showing a slightly better than expected reading in the weekly claims report. The 2-year Treasury note has increased 1/32 to yield 0.35% while the 5-year note is trading 4/32 higher yielding 1.13%. The benchmark 10-year note is currently trading up 2/32 to yield 2.39% while the long bond has dropped 12/32 to yield 3.69%. For the record, the Department of Labor released this morning its weekly Initial Jobless Claims report showing that first time claims were lower than expected at 445,000 versus analyst’s estimate of a 455,000 increase. However, the Continuing Claims report showed a slightly higher than expected reading at 4.462 million versus the expected 4.450 million. The more stable 4-week average of Initial Claims came in closer to the 450K mark at 455,750, a drop of 3,000 from the previous period. Market participants will now wait for tomorrow’s change in Nonfarm payrolls and the Unemployment Rate. Analysts now estimate payrolls will decrease by 5,000 in September and Unemployment will increase by 0.10% for the same period to reach 9.70%.
Additionally, Consumer Credit, a monthly measure of consumer debt, will be released this afternoon at 2:00 pm CT. The report can be broken down into two categories: revolving (i.e., credit cards) and non-revolving (auto and all other loans, excluding real estate). The non-revolving portion accounts for the larger segment of consumer debt and this report has shown that since the recession started in 2008, there has been a contraction of both types of debt especially in the revolving category. For example, the report shows that revolving debt dropped 6.30% YoY in July (the last available reading) while the non-revolving category increased by only a marginal 0.60% for the same period. Today’s report is expected to show a continuation of this trend with American consumers decreasing their borrowings in August by $3.50 billion.
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