Will Employment Give Interest Rates a Shove Higher?

Interest rates are hanging around the 1.71% mark (10 year treasury) today seeming to be waiting for the next bit of ‘news’ that can kick rates higher or drop them back a bit.

Today we had the ADP payroll report which claimed 517,000 new jobs for March–few serious folks pay attention to this report–why they don’t pay attention I am not sure–but they are more willing to believe the numbers released by the federal government each month. Not certain why anyone believes that either of the reports is better than +/- 25% of real numbers.

Just the same, even though I believe almost nothing the government says about these things, I still have to pay attention because they can sometimes move the market.

The consensus forecast for new jobs for March, which is to be released early Friday, is calling for an additional 675,000 jobs–against the 379,000 last month. But I am hearing whisper numbers as high as 1 million.

While it impossible to forecast any movements in interest rates I will venture a guess that if new jobs are reported at or above 1 million we are going to see a spike higher in rates–an 1/8% jump right off the bat which may set quality income issues tumbling a bit (1/2% or so).

We shall see.

6 thoughts on “Will Employment Give Interest Rates a Shove Higher?”

  1. This may not be significant but I wonder why today’s increases in Treasury yields are higher in absolute amount for the shorter maturities?

  2. The U.S. economy brought back even more jobs than expected in March, presaging even faster employment growth in the coming months as more Americans become vaccinated and jobs across industries return.
    The Department of Labor released its March employment report Friday at 8:30 a.m. ET. Here were the main metrics in the report, compared to consensus estimates compiled by Bloomberg:
    Change in non-farm payrolls: +916,000 vs. +660,000 expected and a revised +468,000 in February
    Unemployment rate: 6.0% vs. 6.0% expected and 6.2% in February
    Average hourly earnings, month-over-month: -0.1% vs. +0.1% expected and a revised +0.3% in February
    Average hourly earnings, year-over-year: 4.2% vs. +4.5% expected and a revised +5.2% in February
    At 916,000, payrolls last month grew by the most since August. Payrolls for both January and February were also revised higher: January’s payroll change was upwardly revised to 233,000 from the 166,000 previously reported, and February’s job growth totaled 468,000, up from the 379,000 previously reported.

  3. Unfortunately both my short and long term memory are intact in spite of the best efforts of our amnesia inducing digital, streaming and mass media. Interest rates over the last 13 years have gone from nothing to almost nothing and back to nothing again. I don’t think short of hyper-inflation they will ever go up again in any of our lifetimes.
    Why it is after 10+ years of engaging in financial terrorism, annihilation of the Middle Class and facilitating fiscal insanity on the part of whoever is actually running the country (into the ground) the Fed still has any credibility is beyond me.

    1. I read this post and got me reflecting on more than just 13 years. The question is about employment and interest rates. Well the average unemployment since 1953 runs 5.77% topping out last March at over 20% “basically mandated due to the pandemic”. We now stand at roughly 6.0 %+- but who really knows? with the benefits available? Now I’m trying to figure out how forgiving $50k of student loans to these under employed community organizers and social workers and then getting them back in government, will affect interest rates. Goodness knows all these occupations should be in big demand filling the swamp backup, distributing the fresh helicopter money. “And yes” lets increase taxes on “real job” producers. Interest rates who knows?

  4. Normally the market is forward looking. These reports are backward looking with last months data. If they are accurate at all. When the dumb money reacts to one of these reports that might be a good time to play the other side.

  5. It appears that that the 10 year T-note is heading over 2% in the next few (3-4) months. That seems to be the consensus opinion and the Fed has stated repeatedly that it’s okay with them. If that’s so, perhaps the market has already accepted this outcome and that long rates will gradually move up (at the same credit spreads) as the 10-year moves up. If so, the recent hedge fund liquidation fiasco was just a blip on the screen because there was no follow-up with other liquidations. The Fed has made it clear that they will not let long rates get out of hand on the upside. Maybe the market is taking the Fed at its word. Just a thought………..

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