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JOLTS Report Eases Only Modestly

  • Job openings were higher than expected in May, falling from an upward revised 11.68M to 11.25M (cons 10.9M).
  • Combined with largely unchanged unemployment, it sees the ratio of job openings to unemployed fall at a slightly faster pace, going from 1.99 in March to 1.97 in April and now 1.89 in May, but it remain historically elevated and well above the 1.1 Powell has previously seen as a more balanced figure.
  • There’s a similar story in the quit rate, dipping a tenth to 2.8% in total and 3.1% for the private sector, with the latter trending lower from the Nov’21 peak of 3.4%.
  • The net result is a modest fading of inflationary pressures but at a slower pace than expected. Hitting at the same time as a more robust than expected ISM services, Treasuries has lurched to a sizeable bear flattening (2Y +9.5bps, 10Y +6.5bps) and there’s been a more modest repricing of Fed hikes in near-term meetings (July to 70bps, Sep to 122bps).

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