Nonfarm payrolls
Nonfarm payrolls
  • Prior +187K (revised to +227K)
  • Two-month net revision +119K vs -110K prior
  • Unemployment rate 3.8% vs 3.7% expected
  • Prior unemployment rate 3.8%
  • Participation rate 62.8% vs 62.8% prior
  • U6 underemployment rate 7.0% vs 7.1% prior
  • Average hourly earnings 0.2% m/m vs +0.3% expected
  • Average hourly earnings 4.2% y/y vs +4.3% expected
  • Average weekly hours 34.4 vs 34.4 expected
  • Change in private payrolls +263K vs +160K expected
  • Change in manufacturing payrolls +17K vs +5K expected
  • Household survey +86K vs +222K prior
  • Birth-death adjustment -119K vs +103K prior

The odds of a November rate hike in the Fed funds market rose to 30% from 22% yesterday. Treasury yields are up 5-6 bps since the release and the US dollar has jumped. US 10s are now up to 4.84% and 30s are a shade below 5%.

The White House scheduling Biden for a victory lap after getting the pre-release was a dead giveaway that this would be a strong report, just like I warned.

As for the broader market, this is a problem as it validates the recent move up in Treasury yields and may push 10s to 5%. In turn, the rise at the long end is doing much of the Fed's work for it, which means they probably don't have to hike. However it also means the economy -- particularly things like autos and housing -- are particularly vulnerable to a slowdown next year.