The jobs data and why Treasuries are rallying

Let’s start with this disclaimer from the BLS with regards to the hurricanes:

“The initial establishment survey collection rate for October was well below average. However, collection rates were similar in storm-affected areas and unaffected areas. A larger influence on the October collection rate for establishment data was the timing and length of the collection period. This period, which can range from 10 to 16 days, lasted 10 days in October and was completed several days before the end of the month.”

“No changes were made to either the establishment or household survey estimation procedures for the October data. It is likely that payroll employment estimates in some industries were affected by the hurricanes; however, it is not possible to quantify the net effect on the over-the-month change in national employment, hours, or earnings estimates because the establishment survey is not designed to isolate effects from extreme weather events. There was no discernible effect on the national unemployment rate from the household survey.”

So, the 12k October establishment survey print includes a lot of noise but compares with the estimate of 100k. The two prior months were revised down a total of 112k which is not explained away by weather and likely why Treasuries are rallying with the 10 yr yield down 9 bps post release and the 2 yr yield is lower by 14 bps.