MacroEdge 10/6 Weekly Ozone Report: September Labor Market Report, MacroEdge Vision Update, Mortgage Spreads, and More
In this weekly report - the team dives into the latest labor market trends with our September Labor Market Report, the Vision desk provides an update, we discuss mortgage trends, & more. #MacroEdg
September Labor Market Report (@DonMiami3, MacroEdge Chief Economist)
Good Sunday evening MacroEdge readers and community,
Well we certainly got an ‘election special’ dose with the positive September labor market report, with payrolls coming in higher than consensus and revisions were positive to the previous data points. While payrolls were hot, this was largely driven by government job creation and an acceleration of multiple job holders - which reached a new all-time high in September. The response rate for the Establishment Survey fell to an all-time low, but we can’t ignore some positive signals in the data - namely with the U6 unemployment rate that fell back to 7.7%.
The report provided room for yields to advance back higher, sending mortgage rates to the place they were before the Fed began easing - ironically (and non). While the labor market report was positive, we’re still in a place of caution given signals from employers, and once we move past the election we’ll have more clarity on the final direction of the labor market as these signals progress. The data from September from the private sector side showed a continued gradual cooling, but the hiring and unemployment decreases were a positive signal that can’t be ignored - nor employed as a trend yet given underlying data and historical trends. As outlined below in the report we’ll discuss some of the past signals and market directions - such as how the Nasdaq usually begins to price in a final direction in hard v soft landing scenarios, where we stand today, and things to look out for as we round out the year. The second cut of the year will likely remain a 25bp cut (with the second probability being zero), but only if CPI shows any concerning signals in the upcoming data. The surprise in the September report was the drop in U3, but one month is not a data trend the Fed will use to prevent cuts for the remainder of the year.
With that being said, let’s jump right in, and make sure to catch the Midweek Report this week for more.
