Inflation Expectations and Quits Rate In Focus

UoM consumer inflation expectations and the JOLTS quits rate are the data focus at 10am ET today, with strong readings potentially driving a bear flattening in Treasuries and further USD strength but it might require a high hurdle to do so.

• Within the JOLTS report, markets should be watching closely for another rise in the quits rate after rapid increases in recent months, especially for the private sector at 3.3% in August (no consensus).
• Recent increases have been concentrated in more "Covid-sensitive" industries so the most hawkish signal would be if this were to broaden to other sectors with implications of stronger underlying wage growth expectations.
• UoM consumer 5-10 year inflation expectations have trended higher throughout 2021. A further rise from the current 2.9% (no consensus) could put upward pressure on longer-term inflation breakevens.
• Weakness could be faded somewhat by markets after the compelling recent evidence of strength in CPI and PPI inflation.