Risk-On Ahead Data Risk

Historical correlation between stocks and Treasuries may be short lived, but enjoy the risk-on while it lasts. Throwing caution to the wind ahead Friday's headline Sep employment report (+450k est) and Wed's ADP private jobs data (+430k est), rates sold off sharply Tuesday as equities, still off Sep 9 all-time high of 4538.25 gained 60.0 points to 4351.25.

• Aside from worrying knock-on inflation (nat-gas climbing to appr 12Y highs), why not? If job gains come in 100k either side of the mean estimate, all is good with markets expecting a taper annc from the Fed at the Nov meeting and rate takeoff sometime later in 2022.
• But a significant miss as estimated by StL Fed economist Max Dvorkin would certainly push normalization plans down the road. MNI's interview of Dvorkin from latst Thursday continues to make the rounds. 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.
• By the close, 2-Yr yield is up 0.8bps at 0.2856%, 5-Yr is up 3.1bps at 0.9748%, 10-Yr is up 4.5bps at 1.524%, and 30-Yr is up 5bps at 2.0939%.