Friday’s Nonfarm Payrolls miss (175k jobs added vs. 240k estimate) was enough ‘bad’ economic news to counteract some of the recent positive data and drive U.S. treasury rates lower. Benchmark 10-year yields are -0.126 basis points since payrolls. And the implied probability of a 25 basis-point cut at each of the Fed’s September and December meetings crossed above 50% after dipping to 30% as recently as April 30th. The slight downtick in payrolls likely won’t be enough on its own to accelerate the FOMC’s timeline for cutting the overnight rate, but some see it as the first hint of a cooling U.S. economy.
The U.S. dollar index broke below its recent 150.50/106.50 range following the payroll data, finding new support at 104.50. The DXY was +4.82% YTD through April and is +0.05 today at 105.10.
The dollar’s results vs. the G10 range from a 0.31% gain vs. JPY to a -0.14% slide vs. the EUR.
Treasury yields are lower in all tenors led by a 0.04% drop in the far tenors (15yr-30yr).
The VIX Index (measure of equity volatility equated to investor fear) reached 13.43 today, its lowest point since the end of March. VIX recently peaked at 21.36 on April 19th due to escalating military tension between Iran and Israel. Israel’s incursion into Rafah and Russia’s recent reminder of its nuclear capabilities are not weighing on investor sentiment for now.
This week’s economic calendar includes tomorrow’s Mortgage Applications, Thursday’s Weekly Jobless Claims, and Friday’s Consumer Sentiment.
