BLS Jobs Report Surges to 162K But Conflicts with ADP and JOLTS as Oil Hits $93 Cautiously Floating

BLS Jobs Report Surges but Conflicts with ADP/JOLTS

Thursday's BLS report delivered a surprise 162,000 jobs (vs. 58,000 estimate), with 35,000 government and 127,000 private. The birth/death ratio added 74,000, leisure/hospitality surged 62,000 (vs. ADP's 16,000), and the household survey showed 569,000 job gains with full-time jobs up 735,000. Positive revisions totaled 55,000 (July revised from -23K to +21K). However, this conflicts sharply with ADP (38K) and Revelio (37K), and given the BLS track record of later downward revisions (QCEW showed 30% downward revision last year), the bond market appears skeptical. August is typically a high month for later downward revisions.

Fed Members Divided: Barr Hawkish, Williams Dovish

Fed Gov Michael Barr echoed Warsh's hawkish tone from Jackson Hole, saying if inflation doesn't improve at next week's CPI report ahead of the September 16 meeting, the Fed should hike. However, NY Fed President John Williams struck a dovish tone, saying rates are "in a good place" and yields are rising because of a strong economy, not inflation. He attributed the growth to AI data center buildout causing corporate bond issuance that competes with Treasuries. Williams is very influential as Fed operations run through the New York Fed. Lori Logan and Beth Hammack still think the job market is strengthening, despite the weak data. Fed funds futures now price a 58% chance of a 25bp hike at September 16.

Oil Surges to $93 on Middle East Escalation

Oil surged to $93/barrel after a dramatic weekend of escalation: Iran attempted an attack on a U.S. aircraft carrier, the U.S. sunk three Iranian oil tankers, and Houthis attacked a major Saudi Arabian oil refinery. Diesel prices hit an all-time high, which affects 99% of land freight. The global bond sell-off continued with global yields at their highest levels in almost 20 years. Energy Secretary Chris Wright noted 17M barrels moved through the Strait of Hormuz on Monday (vs. 20M pre-war) and was optimistic on Venezuelan oil ramp-up, but any relief remains elusive.

JOLTS Reveals Weakening Labor Market

JOLTS came in at 7.27M job openings, but with a 177K downward revision to the previous report, net job openings fell by ~100K. The quit rate dropped from 2% to 1.9% (lowest since 2014), signaling fewer workers are voluntarily leaving jobs. The hire rate dropped from 3.4% to 3.2% (just off the lowest since 2013), confirming lackluster hiring. Additionally, about 1/5 of job openings may not be real (window dressing), and double counting occurs at the state level with work-from-anywhere positions. The low unemployment rate of 4.1% masks the weakness, as 700,000 people have left the labor force since May.

Norway Proposes $80B Treasury Sell-off

Norway's sovereign wealth fund, the world's largest, announced a proposal to reduce Treasury holdings by about $80 billion. This selling pressure could be another headwind for lower yields. However, it's just a proposal for now, and it's unclear what the breakdown of those Treasuries would be or whether the funds would be reinvested into mortgage-backed securities. This adds to existing pressure from AI-related corporate debt issuance competing for bond market liquidity.