weekly observations (10/9) - nfp recap and victory lap edition ...

Good morning / afternoon / evening - please choose whichever one which best describes when ever it may be that YOU are stumbling across this weekends note…

First UP … as the geopolitical landscape has taken a very real turn for the worse and middle east tensions have catapulted themselves back TO top of mind and the ‘front page’, my thoughts and prayers to those in harms way.

I’ll spare further commentary regarding the idea / concept that nothing happens without consequences but,

WSJ: Biden Administration Takes Steps to Free Up $6 Billion in Iranian Funds in Prisoner-Swap Deal. U.S. waiver of some Iran sanctions would allow the release of frozen Iranian funds held in South Korea

Exactly what did we THINK was going to happen?

Back to ‘this’ … in my former life I might have cleared the Sunday afternoon / evening calendar as there were likely to be fireworks in markets … Even as I did not cover and facilitate trading IN futures, that will be all that is open Sunday evening as Cash markets likely closed until MONDAY night — please check me if I’m wrong as I’m SO disconnected from the inner workings these days.

While USTs have been (un)correlated with other markets (stocks) and so, NOT the hedge they used to be, well, suffice it to say in some ways I’m happy to report I’ll be watching football when FUTURES markets open up rather than at my Bloomberg …

NOW lets deal with a couple / few things NFP related items … with a much STRONGER THAN EXPECTED point of data, I’ll begin with a WEEKLY look at LONG BONDS (with an HOURLY INSET in effort to capture the intraday crazy which took place) …

I will only say the larger (weekly)trend is NOT bond bulls friend and frankly, the confusion of the shorter term (hourly) squirmish does NOT strike ME as a ‘good’ look (again, at least NOT for the bulls … not yet)

… Hey at least we’re not 100yr Austrian debt (see below).

Basically what we’ve got here are HIGHER rates AND higher stocks because, you know. STAGFLATION’s and that’s great, right?

InvestOpedia: US Equities Rise at Midday as Hiring Picks Up but Wage Growth Slows

SO best of the worst of both worlds? ONLY answer is, as is normally the case, BUY STONKS …

Now in as far as HIGHER RATES goes, a quick look back on WHO may be feelin’ the pain of said HIGHER RATES …

FT: Who feels the pain from the bond sell-off? (this a couple days old BUT…start with BANKS)

AND there are more mentioned in THE STORY

… insurers, pension funds and asset managers that own trillions of dollars of sovereign and corporate debt after loading up in recent years…

Now in as far as that excellent (or terrible — depending on view from your P&L or duration stance) data point, ‘the mother of all UPSIDE SURPRISES’ (McKee — aka AT mckonomy just after the point of data) … a couple / few LINKS in moments AFTER data (and so, before monster / rip yer face off STONK rally occurred),

BBGs Mike McDonough (AT M_MCdonough)

Today's move in US Treasury yields: {G //KEY:6867188:1687} (840a)

CalculatedRISK: September Employment Report: 336 thousand Jobs, 3.8% Unemployment Rate
CalculatedRISK NFP COMMENTS

Guy Lebas (AT lebas_janney) summarises NFP data and markets in a visual

Rishi Mishra (AT aRishisays)

Love the unambiguous nature of this payrolls report. 3m average jumps to 266k. A lot of this may reverse in the months to come (seasonal hiring in L&H, strikes etc.) but the cycle was far from over in September. Also, ADP strikes again... never fails to fail! :)

WSJs Fed whisperer (Timiraos): September Jobs Report Shows U.S. Added 336,000 to Payrolls

WolfStreet - A Jobs Report You’d Expect from an Economy Plugging along Just Fine (What a Bummer?). Thing about Multiple Jobholders

… And so the number of multiple job holders as a percent of total jobholders was 5.0% in September and has been around 5.0% all year, in the middle of the range before the pandemic. In September 2019, before the pandemic, it was 5.3%. Those rates are historically relatively low. In the 1990s it was over 6%, and has trended lower since then. The chart shows the three-month-moving average, which was also 5.0% for September:

So that didn’t inflate the job numbers, what a bummer. And it’s right within the range with the Good Times before the pandemic, and it’s historically low. In March through June 2020, the number of multiple jobholders had collapsed, as had total employment, but since then, it recovered and is now back to pre-pandemic levels, and there is really nothing to get excited about, except maybe that people who want a side gig have a better chance of finding one in this tight labor market.

ZH: Jobs Shock: September Payrolls Unexpectedly Soar By 336K, Biggest Jump Since January And 6-Sigma Beat

ZH: Academy Securities: Expect For Many To Question The Veracity Of This Report
ZH: Inside Today's Jobs Report: 885,000 Full-Time Jobs Lost, 1.127 Million Part-Time Jobs Added, Record Multiple Jobholders

Ultimately, this all translates right back TO … ‘soft landing’ (or NO landing, if we’re being honest) and everyone’s favorite.

STAGflationary investing / trading environment?

I’ll move on AND right TO the reason many / most are here … some UPDATED WEEKLY NARRATIVES … some of THE VIEWS you might be able to use (in a similar sorta way you’ll find content if you pay for ZH PREMIUM? except to say they are SELLIN other folks thoughts and I’m just point it out along w/links which should work IF you have permission (and should NOT work if you don’t) … how can THEY do that? askin’ for a friend …

In any case, THIS WEEKEND I’d note a couple / few things which stood out to ME this weekend … not ALL of which are NFP recaps and victory laps, and some of which may help skate to where ever the puck MAY be going …

ARGUS - Higher Rates, Higher Stock Valuations

BAML - The Flow Show: The Price Of Money (pictures worth thousand words, they say, and the price of 100yr Austrian govies says plenty…#GotDuration?)

… The Biggest Picture: it’s the greatest bond bear market of all time (Table 1); peak-to-trough loss in 30-year US Treasury hits 50%, 100-year Austria govt bond 75% (Chart 2); the 2024 “buy humiliation” trade is bonds, the “sell hubris” trade is US dollar.

BMO weekly - Liked 4.88%, Love 5.10% (getting LONG 2s)
DB on positions

Speculators were bearish in Treasury futures, extending their net short positions by 129K contracts in TY equivalents over the week ending on Tuesday, October 3, 2023

MS global macro weekly, A Phoenix From The Ashes (re-eval long 5s, neutral now)
UBS “Where’s that US recession?

… As a result of the above, we expect the FOMC to relent next year
One point we want to make, if inflation does fall back to 2.0% and the labor market is weakening, FOMCs tend to lower interest rates quickly and substantially. This holds true historically, across regimes, and across FOMC Chairs. Conditional on getting inflation low enough, the reaction to a contracting labor market historically has been a policy rate reaction that has been swift and deep.

… AND more. MUCH, much more.

Moving along and away FROM highly sought after and often paywalled and Global Wall Street narratives TO a few other things widely available and maybe as useful from the WWW

Bloomberg - The Weekly Fix: Brace for 5% yields after long bonds melt down (before NFP)

… Former bond king Bill Gross said retail investors who dumped bonds recently may have been making similar judgments. BlackRock said the fiscal outlook means investors are demanding higher yields to compensate for the risks of holding longer-term debt, pointing to the surge in the term premium.

Part of the concern for the Fed is that the steepest rate hikes in a generation are failing to notably slow the economy. One sign that this dynamic will continue for some time, is the way US companies have been piling on debt — borrowing cash in bond markets to upgrade their operations, expand their businesses and fund share buybacks…

… Few are willing to bet that the peak is in for yields. PGIM Fixed Income’s Robert Tipp was gaming out 6% for the 10-year note. So was JPMorgan’s William Eigen, whose decision to pile into cash has made his fund something of a rarity in the fixed-income universe with positive returns this year. Ian Lyngen, the BMO rates strategist, who called bonds a “screaming buy” at the end of August now says it’s time to stay on the sidelines. 

Daily Chartbook #296

… 15. Oversold UST. Bonds are oversold. Previously, "oversold sell-offs all coincided/foreshadowed 'events;': Oct’87 crash, May’94 Tequila crisis, Jun’99 internet bubble, Mar’21 crypto pop, Oct'22 Nasdaq pop."

16. End of New Abnormal. "The velocity of the rate backup has been head-spinning, as it took only three years to fully reverse the decline in the bond yield during the 12 years of the New Abnormal."

Kimble -NYSE Index Testing Covid Lows Rising Support

… AND for any / all (still)interested in trying to plan your trades and trade your plans in / around FUNduhMENTALs, here are a couple economic calendars and LINKS I used when I was closer to and IN ‘the game’.

First, this from the best in the strategy biz is a LINK thru TO this calendar,

Wells FARGOs version, if you prefer … (HERE)

… and lets NOT forget EconOday links (among the best available and most useful IMO), GLOBALLY HERE and as far as US domestically (only) HERE …

THAT is all for now. Enjoy whatever is left of YOUR (long?) weekend … and hopefully one and all are able to not just say the words but do the deeds and … stand WITH Israel.