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REPOST Market Roundup: Jobs Blowout Closes Gap w/ Pre-Pandemic Lvls

US TSYS
Corrects Current Yield Levels. Much stronger than expected jobs gains for July: +528k vs. +250k est. spurred selling across the board, volume gaining momentum in shorts to intermediates as yield curves extend inversion to new 22 year lows (2s10s -44.034). Meanwhile, unemployment rate dropped a tenth to 3.5% after flattening out at 3.6% for six months. Average hourly earnings rose 0.5%, a tenth faster than in June.
  • Heavy short end selling included 5Y Blocks as strong data spurs recession bet positioning as payrolls close gap with pre-pandemic levels, 75bp rate hike in September getting priced in again.
  • Technicals for TYU2 currently trading 119-13.5 (-1-10) nearing key support of 119-05 50-day EMA. break of the 50-day EMA would concern bulls with next key lvl at 117-14+ Low Jul 21 and key near-term support.
  • Seeing some fading the deep curve inversions w/recent Block buying over 15,000 TUU2, 2s10s currently -38.652 -2.391 vs. -44.034 low - lvl not seen since Sep 2000.
  • Currently, 2-Yr yield is up 17.7bps at 3.2195%, 5-Yr is up 17.2bps at 2.9641%, 10-Yr is up 15.7bps at 2.8452%, and 30-Yr is up 13.1bps at 3.096%.
  • Cross asset update: Stocks marginally lower/off lows (SPX eminis -10.75 at 4141.5 vs. 4104.25 low); Spot Gold weaker -13.18 at 1778.10; Crude rebounds (WTI +1.33 at 89.87).
  • Data: Slow start to next week, nothing scheduled for Monday except US Tsy bill auctions ($54B 13W, $42B 26W). Tuesday picks up with Nonfarm Productivity (-4.6% est) and Unit Labor Costs (9.8% est), US Tsy $34B 52W bill and $42B 3Y Note auctions.
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