Job openings unexpectedly increased in August, fueled by a surge in white collar postings.
The number of available positions increased to 9.61 million from an upward revised 8.92 million in July according to the Job Opening and Labor Turnover Survey (JOLTS). The level of openings topped all estimates in a Bloomberg survey. Treasury yields rose and the S & P 500 declined after the report.
The “quits rate,” which measures voluntary job leavers as a share of total employment held at 2.3%, matching the lowest since 2020. Fewer quits implies workers are less confident in their ability to find another job.
The ratio of opening to unemployed was little changed at 1.5. At its peak in 2022, the ratio was 2 to 1.
The Federal Reserve is closely watching the progress of the re-balancing happening in the labor market. Central Bank officials expect this trend to continue, helping to ease price pressures.
The data was interpreted as bearish, defined as the number of openings are remaining well above levels recorded prior to the pandemic and moving in the wrong direction, thus supporting the mantra of “higher for longer.”
Treasury yields continue to rise on the data as the 30-year benchmark is now at its highest level since 2007. Bloomberg writes “blue chip bond yields have also surged to the highest level since 2009, potentially hurting returns for the second consecutive year in the popular and generally risk adverse 60/40 portfolio.”
Sentiment indicators are now suggesting 40% odds of another quarter point rate increase at the Fed’s next meeting in November and about 60% odds of a move by year end.
To refresh all, nine months ago sentiment indicators were suggesting the year end overnight rate would be around 4.0% and the economy would be near or in a recession, the result of aggressive monetary policy.
Friday the BLS Employment report is released. Will it confirm the JOLTS data?
Commenting on yesterday’s equity markets, Bloomberg writes “The JOLTS data was the catalyst for all sectors to be lower and 89% of members to be down.” The VIX, or index measuring volatility, is above 20, the highest reading in 16 months.
The Dow is now negative for the year but the S & P 500 and especially the NASADQ 100 are still far from slipping into the red this year given the torrid advance of seven members. However, several S & P 500 sectors including utilities and real estate are now down double digits for the year.
Last night the foreign markets were down. London was down 0.03%, Paris up 0.32%, and Frankfurt up 0.19%. China was 3.16%, Japan down 2.28% and Hang Seng down 0.78%.
Futures are little changed as all markets are in oversold territory according to Bloomberg. The 10-year is up 2/32 to yield 4.79%. Yields on this global benchmark are up about 30 bps for the week. Earlier this morning the 30-year Treasury touched 5% for the first time since 2007.
