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Late Bond Surge Extends Session Highs, Pricing in Employ Miss?

US TSYS
Long end 30Y Bond futures surged to new session highs heading into the close, 30YY slipped to 2.0329% low, before retracing slightly. No specific driver or headline for the move. White House officials say Pres Biden to "meet with the House Democratic caucus about his legislative agenda at 1530ET.
  • Rather muted start to new month/quarter -- end to the week as interest in next week Friday's Sep employment report heats up. Current mean estimate holding around +500k job gains, from a dozen economists polled by Bbg.
  • Stark contrast to potential for a huge tail event miss of as much as -818k MNI reported as estimated by StL Fed economist Max Dvorkin late Thursday. Excerpt:
    • U.S. hiring in September "could be weak or even negative" in September, according to a St. Louis Fed analysis of real-time employment data from the scheduling software company Homebase, showing a seasonally-adjusted decline of 818,000 jobs, a St. Louis Fed economist told MNI.
    • The model forecasts changes in employment as measured by the BLS's household survey, which tracks closely the headline payrolls figures from the BLS's establishment survey. A smaller drop of 500,000 jobs was forecast by the model without seasonal adjustment, the worst since January.
  • Exercising caution, decent amount of position squaring well ahead the data. If a huge miss occurs, rates will retrace higher as tapering expectations are priced out of the curve. A large upside beat -- tapering remains in play and perhaps accelerates timing of rate hikes. By the bell, 2-Yr yield is down 1.2bps at 0.2638%, 5-Yr is down 3.4bps at 0.9312%, 10-Yr is down 2.4bps at 1.4633%, and 30-Yr is down 0.9bps at 2.0357%.
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