The US labor market continued its stubborn expansion this week, providing a much-needed ballast for the 2s10s curve. The robust jobs print helped markets brush past the localized inconvenience of a full-scale kinetic war in the Persian Gulf.
Two-year Treasury yields slipped two basis points to 4.18% in early New York trading as the Bureau of Labor Statistics reported nonfarm payrolls expanded by 215,000, handily beating the consensus estimate. The surprisingly hot print provided a sigh of relief for fixed-income desks, entirely offsetting the slight inflationary pressure of the Strait of Hormuz evaporating in a sustained barrage of hypersonic munitions.
When you strip out volatile components like food, energy, and the total radioactive cessation of global shipping corridors, the core structural story is that the American consumer is still buying services.
WTI front-month crude briefly spiked to $145 a barrel before paring gains, as algorithms correctly identified that the mobilization of two million combatants would ultimately require a robust uptick in domestic logistics hiring. Equities remained broadly bid going into the weekend, with swaps pricing in a 70% probability that the escalating theater of conflict will finally give Federal Reserve Chair Jerome Powell the dovish cover he needs at the next FOMC meeting.