Employment data

Investors have turned to private readings such as the Challenger, Gray & Christmas Inc. report showing companies announced the most job cuts for any October in over 20 years.

Traders are shifting their focus to Friday's release of the consumer price index, the first real glimpse on the state of the economy since the start of the US government shutdown.

While the shutdown has delayed the release of federally-compiled statistics, economists at Citigroup Inc. and Goldman Sachs Group said state-level data suggested initial jobless claims increased last week.

But even if global financial crisis 2.0 doesn't come, investors may well be in for a rough ride in the coming months as frothy financial markets come to terms with a cyclical slowdown.

The yield on US 10-year debt edged two basis point higher to 4.04% after falling to a five-month low Thursday, but still remained on course for a fourth week of declines.

In SOFR options, which closely track the Fed's policy path, a number of large positions have emerged that look to benefit from an outsized cut of 50 basis points at next week's meeting.

The attention will now turn to reports on producer prices and consumer prices, due Wednesday and Thursday, for signals of how quickly the Federal Reserve will lower borrowing costs.

Traders were watching a slew of data on a bigger-than-expected increased in jobless claims and expanded manufacturing Thursday.

Oneok plans to sell three-part, dollar-denominated senior unsecured notes while BMW is looking to price dollar-denominated debt in a four-tranche offering.

Interest-rate swaps showed traders now see a roughly 70% chance of a quarter-point rate cut by September. Fewer than two rate cuts are fully priced in for the year.

The labor market continues to cool gradually, a sign that businesses facing heightened uncertainty and turmoil didn't significantly alter their hiring plans.

Major banks revamped their forecasts for US monetary policy Friday after data showed the US unemployment rate rose again in July, calling for earlier, bigger or more interest-rate cuts.

While home lending employment fell, a stronger-than-expected report on the broader labor market immediately raised concerns about the potential for higher interest rates.

Treasuries fell, extending a selloff in government securities that has rapidly pushed up yields over the past month and threatens to undercut the economy by driving up borrowing costs.

The reduction in employment followed a rise in rates this summer, but hiring has generally been stable since spring.

The May uptick in nonbank housing-finance payrolls came almost entirely from lender hiring as loan broker numbers plateaued and construction demand persisted.

Applications for U.S. unemployment benefits last week rose to the highest since December, suggesting some softening in what's still a tight labor market.

The March estimates for payrolls of nonbanks involved in home lending confirm widespread anecdotal reports of industry layoffs, but strength in broader financial-services hiring could pick up the slack.

In November, employment increased by 1.14 million in the household survey but payrolls rose by just 210,000 in the employers survey, the biggest gap since October 2020.

So far companies plan on using roughly the same number of employees as they shift from handling payment suspensions to assessing borrowers who have seen long-term declines in their incomes.