- Significantly higher than consensus NFP print at 263k
- Average hourly earnings at 0.6% (vs 0.3% expected) with previous month revised higher
- Treasury yields 10–15bp higher, stocks -2% pre-open. Terminal rates spiking back close to 5%
- Leaves very little room for Fed to maneuver with job market being this tight — expect more hawkish Fed speak from here until the blackout period on December 8th
- Market had rallied dramatically over the past week with financial conditions easing massively — a lot of this will probably have to be unwound now into CPI and the Dec FOMC
- Worst of both worlds: manufacturing and economic activity ARE slowing while job market is stubbornly strong; Fed has no choice but to “hike” into a recession. Yield curve will invert further and stocks will struggle to rally much more in this scenario
- Might be in for a very rough Friday session given the recent squeeze rally and weekend de-risking
