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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI (LONDON) - Executive Summary:
- The nonfarm payrolls report was far softer than expected in October at just 12k (cons 100k) along with a heavy, and highly important, two-month downward revision of -112k, mostly concentrated in August.
- The strike impact was relatively clear-cut but there are far more question marks over the extent of storm disruption even if the establishment survey saw very few fingerprints of such.
- Still, the unemployment rate was broadly as expected at 4.15% as it remained below the 4.25% seen in July and is still below the 4.4% the median FOMC member forecast for Q4.
- Real GDP growth technically surprised a touch lower with a strong 2.8% annualized in Q3 but the details were more encouraging than analysts expected with particularly solid domestic demand. Very early Q4 tracking suggests scope for overshooting the FOMC’s real GDP Q4 Y/Y forecasts.
- We view labor trends and the calendar as making 25bp cuts in Nov and Dec FOMC meetings as the base case now. Fed Funds show similar with a cumulative 46bp of cuts for close to the median FOMC dot implying 50bp of cuts.
- Terminal rates have seen stronger climbs on the week though, with SOFR implied yields rising 14bps on the week through 2026 contracts, aided by additional spillover from a particularly abrupt increase in BoE terminal rate expectations after the UK Budget.
- Ahead, the US Presidential Election on Tuesday and the FOMC decision unusually on a Thursday are two major risk events in an otherwise light US calendar.
PLEASE FIND THE FULL REPORT HERE: US week in macro_241101.pdf
Near-term rates lower on the week but terminal rates climb strongly:
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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