Tuesday, October 4, 2022
Market indices continue their rally in today’s pre-market, following one of the single-best trading sessions of the year yesterday, which also happened to kick off calendar Q4 and was the first post-September trading day. The Dow currently looks to open nearly another +400 points higher, with the Nasdaq +230 and the S&P 500 +60 points. Scratching and clawing out of bear-market territory we are.
Peak bond yield rates appears to have been the rallying cry, as economists and market analysts all see the rather inflamed 2-year, which had been north of +4.3% just last week, has mellowed to around +4.04%. The 10-year yield, while maintaining its inversion gap from the 2-year, is roughly +3.59% at this hour. Even hedge-fund king and permabear Ray Dalio calls our current situation a “neutral market.” Considering the source, this is a fairly bullish claim. Onward and upward!
After today’s open, the first of several key employment reports gets released, this one for the month of August. The Job Openings and Labor Turnover Survey (JOLTS) saw 11.2 million job openings for the month of July, which is still something of a strong employees’ market. This reality may make it harder for wages to stop climbing, which is something the Fed would rather not see. So a surprise to the downside would be favorable today. We haven’t seen a JOLTS headline sub-11 million since November of last year.
Job Quits the last time around came in still high at 4.18 million, though well off the 4.45 million level we saw at the peak back in March of this year. By far the biggest job-quit region has been in the South, which has shown no month lower than 1.72 million per month in the current cycle. The potential good news here is that this 1.72m figure was from the latest read — hopefully we dip meaningful below it today.
Job Quits are a good sign of employees feeling empowered to find work elsewhere. Again, this is something the Fed would rather not see. So as we batted around last week, we’re still in the midst of a “good news is bad news” — and vice-versa — cycle.
Factory Orders for August are also due out after today’s open, expected to come in flat month over month. This follows a -1.0% print from July — the first negative headline since April 2020, thus the lowest we’ve seen in our current period. A 0.0% read today would then be the second-lowest factory order monthly total since the pandemic.
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