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Pre-Markets Down on 4.7% 10-Year; JOLTS Data This Morning

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Pre-market futures are down again; somehow, merely changing pages on the calendar hasn’t yet changed the fortunes of the stock market. The Dow, down now five of the past six sessions, is -180 points at this hour. The Nasdaq, the only of the major indices to be in the green over the last week of trading, is -125 points. The S&P 500, which contains all of the Dow 30 and many of the 2500 stocks on the Nasdaq, is -30 points currently.

The 10-year bond yield continues to be an albatross around the neck of equities trading, currently bringing returns of 4.71% — a nice safe-haven after mid-year stock market levels had brought +46% on the Nasdaq, +19% on the S&P, etc. — which is the highest we’ve seen since August 2007, more than a year before the financial crisis brought down everything, including the global economy.

We do see a slimmer inverted yield curve between 2-year and 10-year treasuries these days at roughly -0.43%; back in July that inversion was around 100 basis points. But with higher rates for longer from the Fed, we may finally see that inversion go away, albeit at higher yield levels than most analysts had been considering. We’ve had an inverted yield curve — which often pre-dates an economic recession — since July of 2022.

Kicking off Jobs Week today (after no employment data released yesterday), the Job Openings and Labor Turnover Survey (JOLTS) report for August will be out at 10am ET this morning. Expectations are for a flat read month-over-month, to 8.8 million job openings for the last full month of summer. This is a long way down from cresting at 12 million job openings back in early 2022, and we’ve coming crashing through the 10 million level we last saw this past spring.

Should today’s figure come in line with expectations, we’ll remain at levels we haven’t seen since early 2021, when JOLTS headline numbers were in the midst of a huge post-Covid upswing. The couple years pre-Covid, we saw job openings roughly 1000 units lower per month than where we are currently. We were at 6 million-ish back in 2016-17, off Great Recession lows just over 2 million job openings per month.

Job Quits last time around were 3.55 million, the lowest monthly tally in 2 1/2 years. Job Quits are a good gauge for employee confidence — if more people are quitting their jobs, usually there is a higher likelihood they’ll find a better job in the near future. All-time highs in this metric were from late 2021 and early 2022 at around 4.5 million, and we were still over 4 million job quits per month as recently as May. As of the July number, we’re close to pre-Covid levels.

Wednesday’s ADP (ADP - Free Report) private-sector payrolls and Friday’s Employment Situation report are the other two components of Jobs Week for this month. Because we don’t have a Fed monetary policy meeting this month, we’ll see another Jobs Week in November. By then — and including the lion’s share of Q3 earnings season, which has yet to yield meaningful amounts of data — will set the table for the Fed to decide on interest rates going forward. All this is to say: we’re not there yet.

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