Treasuries Reach Day's Highs After JOLTS Job Openings Slumps
Comment of the Day

April 04 2023

Commentary by Eoin Treacy

Treasuries Reach Day's Highs After JOLTS Job Openings Slumps

This article from Bloomberg may be of interest. 

Treasury 10-year note futures spike to fresh session highs after February JOLTS job openings declined more than estimated with January revised lower. At the same time February factory orders missed estimates for headline and ex-transport readings. 

US 10-year yields flip to richer on the day into the move as 10-year futures top at 115-28, with around 60k 10-year note contracts changing hands over 3-minute period

Belly- and front-end-led gains steepen 2s10s, 5s30s spreads onto session wides, higher by 7bp and 4bp on the day

Fed-dated OIS for May meeting drops to around 15bp of additional hikes priced, giving up around 5bp of hike premium in the aftermath of the data

Eoin Treacy's view

Job openings are down two million in the last 15 months. It is arguable how much predicative power the jobs openings have primarily because it is a relatively new data series and there are questions about how the number reflects conditions on the ground. However, there is no dispute a top is in place and the number is trending lower. It stands to reason that job openings should be a lead indicator for decisions on firing workers since it should be a lead indicator. Afterall most firms stop hiring before they fire workers.

Treasury yields continue to compress. That implies deflation is a more pressing risk than inflation. Gold surged to close back above the $2000 level as the Dollar declines.. The potential for a return to liquidity provision in response to sharply lower growth suggests clear potential for the precious metals sector to outperform.
Silver rallied to break the medium-term sequence of lower rally highs today. It is overbought in the short term but has a lot of catch up potential relative to gold.

Platinum has also cleared the psychological $1000 level again. 

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