September Jobs Preview And How To Trade It: Beware A Bond Squeeze As August Seasonals Reverse

A month ago, our August jobs preview argued that "good news would be bad news." Then August delivered good news in volume. Payrolls rose by 162K, a 4-sigma beat and 38K above the highest estimate on Wall Street. Rate-hike odds jumped, and two weeks later Warsh hiked for the first time since July 2023.

So it's a little awkward that the Street now spends most of its September previews explaining why August didn't really happen. The main suspect is seasonal adjustments. Barclays says that if August had been adjusted with last year's seasonal factors, the "blockbuster" 162K gain would have been a 74K decline, which may very well have prevented a rate hike.

Expectations